Auto Insurance In Kentucky: Why The High Cost?

Kentucky's auto insurance rates are among the most expensive in the United States, ranking as the fifth most expensive state for car insurance in 2020. The average annual car insurance premium in Kentucky was $1,849, compared to the national average of $1,483. While the rates have decreased since 2020, they are still higher than in many other states. Several factors contribute to the high cost of auto insurance in Kentucky, including high traffic density, a high rate of car thefts, and a significant number of uninsured motorists. Additionally, Kentucky is a no-fault state, which requires all drivers to have personal injury protection (PIP) coverage, increasing the overall cost of car insurance.

High traffic density

Kentucky's high traffic density is further exacerbated by its status as a no-fault state. In a no-fault state, drivers must file a claim with their insurer after an accident, regardless of who is at fault. As a result, insurance companies are more likely to receive claims from customers in Kentucky, leading to higher insurance rates.

In addition, Kentucky's high traffic density can lead to longer commute times for residents. A longer commute means spending more time on the road, which increases the likelihood of being involved in a collision. This also contributes to higher insurance rates, as insurance companies take into account the duration and distance of commutes when setting rates.

The high traffic density in Kentucky not only affects those living in densely populated urban areas but also those in rural or suburban areas. Even a small increase in population density can impact insurance rates, as the risk of accidents and claims rises. Therefore, residents in less populated areas of Kentucky may still experience higher insurance rates due to the overall high traffic density in the state.

To summarize, Kentucky's high traffic density increases the risk of accidents and claims, leading to higher insurance rates. This is further influenced by the state's no-fault policy and the impact of commute times. As a result, residents across Kentucky, regardless of their specific location, may face higher insurance costs due to the state's overall high traffic density.

High rates of car thefts

Auto insurance in Kentucky is expensive due to several factors, one of which is the high rate of car thefts in the state. Motor vehicle theft is a common crime in Kentucky, with a reported incident every 55 minutes. The high rate of car thefts drives up the cost of auto insurance as insurance companies factor in car theft incidences when calculating premiums. The more claims that are filed, the higher the premiums will be.

The cities in Kentucky with the highest number of motor vehicle thefts in 2015 were Louisville, Lexington, Bowling Green, Covington, Owensboro, and Shively. Louisville had the highest number of thefts, with 4,577 reported offenses, while Shively had the lowest of the group, with 102 reported offenses.

The most commonly stolen vehicles in Kentucky in 2021 were older models, including the 2006 Ford pickup, 2002 Chevrolet pickup, and 2001 Dodge pickup. Newer models were also targeted, such as the 2020 Chevrolet Malibu. The National Insurance Crime Bureau also reported that vehicles like the 2005 GMC pickup and 2018 Jeep Cherokee were frequently stolen across the United States.

To protect their vehicles from theft, the National Highway Traffic Safety Administration (NHTSA) offers several tips for vehicle owners. These include always taking your car keys with you and never leaving them in or on your vehicle, closing and locking all windows and doors when parking, and parking in well-lit areas. Additionally, the NHTSA recommends not leaving valuables in your car, especially where they can be seen by passersby, as thieves target not only the vehicles themselves but also valuable items inside, such as electronics and purses.

To make vehicles more difficult to steal, the NHTSA suggests using anti-theft devices, such as alarms and steering wheel locks, which can deter thieves and bring attention to any theft attempts. Other devices can prevent hot-wiring by stopping the flow of electricity or fuel to the engine. Recovery systems using electronic transmission technology can also help police locate stolen vehicles.

Uninsured motorists

The Insurance Institute for Highway Safety reports that approximately 14% of Kentucky drivers were uninsured in a recent year, higher than the national average of 12%. This high percentage of uninsured motorists increases the risk of accidents with uninsured drivers, which can result in costly claims. The best way to protect yourself from uninsured drivers is to have uninsured motorist coverage as part of your auto insurance policy.

In Kentucky, the minimum liability insurance requirements for motor vehicle owners include $25,000 per person and $50,000 per accident in bodily injury coverage, as well as $10,000 per accident in property damage coverage. However, if you are in an accident caused by an uninsured driver, you may need to file a claim with your own insurance company, potentially exceeding the coverage limits.

Uninsured motorist coverage provides financial protection in such situations, covering medical expenses and other losses if you are injured by an uninsured or underinsured driver. It is a valuable addition to your auto insurance policy, especially considering the relatively high number of uninsured motorists in the state.

While auto insurance in Kentucky is slightly cheaper than the national average, the high percentage of uninsured motorists is a significant factor in driving up insurance costs for all drivers. This issue underscores the importance of comprehensive auto insurance coverage, including protection against uninsured and underinsured drivers.

Mandatory personal injury protection coverage

In Kentucky, personal injury protection (PIP) insurance is a mandatory component of auto insurance policies, with some exceptions. Kentucky is a no-fault state, which means that if you are involved in a crash, you must file a claim with your insurer regardless of who is at fault.

PIP insurance in Kentucky provides coverage for medical expenses, lost wages, and other costs related to your injuries, no matter which party was at fault for the accident. At least $10,000 of PIP insurance is mandatory for all drivers, except motorcyclists, but you can typically purchase up to $50,000 from your insurer. The minimum level of personal injury protection pays for up to $10,000 of medical expenses per person in an accident, 85% of lost wages due to injury (up to $200 per week) from an accident, and other related costs, such as in-home health services.

You can choose to reject PIP by submitting a document to the state, which means you're giving up your PIP benefits. If you reject PIP, your bodily injury liability coverage premiums will increase to account for the increased risk to your insurer, as other drivers will be able to sue for injuries that wouldn't otherwise meet the minimum thresholds.

The cost of PIP insurance in Kentucky varies depending on factors such as your coverage limits, whether you've added a deductible, and the city where you live. The minimum PIP is fairly expensive, starting at $121 per month. If you reject your tort limitations and don't purchase PIP, you are still likely to face increased rates for the bodily injury liability portion of your insurance.

Poor credit score

A poor credit score can significantly impact car insurance rates in Kentucky. A low credit score is associated with higher insurance rates because it is linked to a higher likelihood of filing insurance claims. Drivers with poor credit scores are seen as higher-risk clients, and insurance companies compensate for this risk by charging more for coverage.

In Kentucky, a driver with a good credit score pays an average of $1,488 per year for car insurance, while a driver with a poor credit score pays up to $1,535 more per year. This means that a poor credit score can increase insurance rates by almost 100%.

The impact of a poor credit score on insurance rates is not limited to Kentucky and is observed across the United States. On average, drivers with poor credit pay 115% more for full-coverage car insurance than those with excellent credit. In some states, such as Washington, D.C., poor credit raises rates by more than two and a half times the average.

Improving a poor credit score can take time, but it is worth the effort to ensure that individuals are paying the lowest possible rate for their car insurance. Paying bills on time, maintaining old lines of credit, and keeping hard credit inquiries to a minimum can all contribute to improving a credit score and, consequently, reducing insurance rates.

Frequently asked questions