Residents of Massachusetts looking for coverage on their car might be wondering: Why is car insurance so expensive? But let’s step back for a moment. Is Massachusetts _really _more expensive than other states?

The answer depends, of course, on exactly where you are. Your location can have a huge impact on your rates. Overall, the average price for car insurance across the state is below the national average. But people living in densely populated urban areas, like Boston and Worcester, pay well above the national average for coverage. With so many Massachusetts residents living in the cities, this results in a big part of the population paying more on car insurance.

The cost of living in the city

Coverage providers base the cost of a policy on the risk of suffering losses - and unfortunately for motorists in the bigger cities, the risks in these areas are higher than the national average, which translates into a higher price.

According to the Office of Consumer Affairs and Business Regulation (OCABR), the state of Massachusetts has more property damage and bodily injury claims per motor vehicle than almost any other state. The more claims there are in a given area, the more you pay for coverage. The majority of policyholders are driving in areas with dense traffic where they are more likely to be involved in an accident. This can make it hard for low-income drivers to find coverage.

Comprehensive coverage is generally higher in the city. Boston is one of the county’s oldest cities and structure fires are a persistent issue. There is also a higher risk of vandalism and theft. Sometimes you might be denied coverage or have to pay a much higher rate if your vehicle is a common target for theft and there are no anti-theft devices in place.

Of course, this doesn't mean moving to the suburbs will necessarily make your car insurance cheaper, unless you plan on taking the commuter rails. A long commute will also bump up your rates. But if you’re living in the city and don’t drive your car on a daily basis, you can talk to your insurance agent about a low-mileage discount for your vehicle.

How No-fault laws and fraud affect your premiums

Massachusetts uses a no-fault system for inquiries received in an auto accident. If you’re injured, you will make a no-fault insurance claim, and your personal injury protection will cover the costs of an injury. Because of this, whenever you file a claim, you might have a hike in coverage regardless of who caused the accident.

In theory, no-fault laws are meant to reduce the number of lawsuits in civil court over traffic accidents. They were established in the 1960s as a way to reduce the amount of time it took to get claims when so many cases went to court. In practice, broad judicial interpretation of the amount of money you are allowed to sue over has complicated matters and allowed more lawsuits than expected.

The cost of this litigation plays a role in the price of your insurance policy. If the injured party sues the driver who caused the accident, the consumer's liability protection will pay the cost of legal defense. As there are more and more lawsuits involved with accidents, car insurance premiums will continue to rise.

It doesn’t stop there—insurance fraud makes things even worse. Individuals may make a claim on their personal injury protection policy for people who weren’t even in the car at the time of the crash. And fraud rings can use unscrupulous lawyers and doctors to rack up enough phony medical bills to sue over. The more fraudulent claims there are, the more insurance has to charge to make up for losses.

Property damage uses a tort system

The no-fault laws don’t apply to property damage in Massachusetts. Your liability coverage will pay for damage you’ve caused to other vehicles, although if you’ve only got the bare minimum $5,000 coverage, you might be in for some out-of-pocket expenses. (Generally speaking, buying more than the minimum coverage is smart! Although Massachusetts law only requires you to get a $5,000 in liability insurance, a serious auto accident can easily run to many tens of thousands of dollars - to say nothing of medical expenses. Make sure your automobile insurance coverage limits are high enough to accommodate your real-world needs, even if this adds a few dollars to your monthly insurance premiums.)

Liability coverage will not pay for damages to your own vehicle. If you cause an accident, you will need collision coverage in order to get help with repairs. If you still owe money on your vehicle, your lienholder will require you to have extra protection until you’ve paid it off. Make sure you’ve got the coverage you need so they don’t try to repossess your car.

Comprehensive coverage will pay for losses from theft, vandalism, storms, and hit-and-run drivers. Remember, losing control of your vehicle because of ice or other road conditions doesn’t count. It’s your responsibility to drive safely and use the proper equipment, no matter what the road conditions are.

Higher-risk areas will charge more for car insurance coverage, but that doesn‘t mean you should skip out. If you can’t afford to repair or replace your vehicle when something happens to it, then you should look at your options.

Less expensive MA insurance may be available

Fortunately for Mass. residents, the state now allows insurance carriers to be competitive with their rate. Prior to April 2008, the insurance commissioner would set rates for carriers under the "fix-and-established" system. Therefore, very few companies were in the marketplace and motorists had very few choices for coverage.

Now, under "managed competition", the insurance company is able to set unique car insurance rates in order to attract new customers. This has made comparison shopping vital for motorists looking to find the cheapest car insurance available. Since the “fix-and-establish” system was replaced by “managed competition”, many more insurance car insurance companies have entered into the Massachusetts car insurance market, giving residents an increased chance of finding savings and benefiting from competition among auto insurers.

Aside from competing for business by offering lower rates, carriers can now offer a discount for clean driving records which might lower premiums even further. By the same token, motorists may receive a surcharge for having certain traffic violations (e.g. a speeding ticket) or a car accident on their driving record. All rates still must be submitted to the insurance commissioner and approved, but it has been proven that competition benefits consumers and gives you the opportunity to save money.

How to find the best rates

Thanks to the internet, comparing rates has never been easier. So what do you need to know to get a quote? Your rates are calculated by a combination of personal factors and vehicle factors. You'll need to provide your address, birthday, driving history, and credit score. You’ll also need to provide the year, make, and model of your vehicle. No need to worry about personal information, but if you’re not sure about your credit score or driving record, or you haven’t purchased the vehicle you want to insure yet, any inaccuracies will alter your quote.

In Massachusetts, gender doesn’t affect the price of premiums. Men and women will pay the same rate if all other factors are the same. Although the Bay State has had this policy in place for thirty years, it’s recently started spreading. More and more states are adopting this policy to remove gender disparity in auto insurance premiums.

Finding affordable car insurance isn’t a cookie-cutter situation. Different insurance companies cater to different customers. A 50-year-old person with an older vehicle and a clean driving history will pay less than a 17-year-old with a late model sedan. But car insurance companies that cater to high-risk Massachusetts drivers will be a better place to shop for the teenager, and the older person would do better finding a company that rewards low-risk drivers. And if you still find yourself unable to afford car insurance, check out the Massachusetts Auto Insurance Plan.

The Bottom Line

It’s important to take the time to consider the insurance coverage you really need, and find an auto insurance policy that’s actually right for you. For example, if you’re adding an inexperienced driver or teen driver to your car insurance policy, you might consider switching to an insurance provider with a better rate for risky drivers.

Don’t go forward with an insurance policy if you still have unanswered questions, and don't choose cheap car insurance if it doesn't really meet your needs! Instead, make sure you’ve got the right policy for you. That means taking the time to get car insurance quotes from a number of different insurance companies in Massachusetts. Finding auto insurance coverage with just the right combination of bodily injury coverage / PIP coverage, liability coverage, and possibly uninsured motorist / underinsured motorist coverage will take some time. Don't worry - it's worth your time, and it'll save you money and hassle in the long run!