has consistently noted that the costs of owning a car in a big city such as New York are incredible. These costs can easily ruin a person’s efforts to accumulate significant assets. That’s because the car often eats up money that could go into investments.

For instance. Let’s say you spend $1,000 a month on your car. Let’s say you take half of that, $500 a month, and put it into a regular investment program—say index funds—that earn nine percent a year. You do so for 40 years. At the end of the period, you have $2.35 million before taxes. Not having the car—along with all its costs including insurance—made a tremendous difference in your life.

And car insurance is just one of the outrageous costs that often drives New Yorkers nuts.

A New York Outrage

New York has the most expensive car insurance rates of 47 states surveyed, according to a new WalletHub study.

And pretending you live elsewhere won’t help much. New Jersey has the 45th most expensive car insurance rates. Connecticut is 38th and Pennsylvania is 41st of 47 states surveyed. Three states weren’t included because they didn’t have enough data.


Part of the problem of high car insurance rates in New York is the nature of the region, said WalletHub, a consumer finance website.

“Car insurance rates are influenced by geography,” says Jill Gonzalez, a WalletHub analyst. “Typically, states with more people who live in concentrated urban areas, like New York, New Jersey and Pennsylvania, have higher insurance rates.”

She adds that, “insurance rates are also tied to median income levels, since they sometimes cover lost wages from injuries, among others. This is why many Northeastern states have more expensive car insurance.”

An insurance industry expert agrees.

“You have a high population density, affluent areas, where people are making lots of car trips, rates are high” says David Hodge, vice president of insurance operations for AAA New York.

He says the average New York driver pays about $1,200 a year, with downstate more and upstate less. Hodge praises the efforts of regulators, who he says have a “safety first” approach. He cites several factors for high rates.

New York’s Unique Insurance Structure

Hodge said New York has a first party medical coverage/personal injury protection (PIP) policy. “If you are in an accident, you can tap into your car insurance immediately to pay for medical costs.” But that also means, he adds, “there’s a lot of fraudulent claims made in New York and that raises rates quite a bit.”

A spokesman for the New York State Department of Financial Services, which merged seven years ago with the state Insurance Department, said a driver’s record and the kind of vehicle are key factors.

“In all cases,” the spokesman added, “the Department utilizes its statutory authority to protect consumers by reviewing rates to ensure rates aren’t excessive, inadequate or unfairly discriminatory.”

But is there any relief for drivers?

Do You Want to Make a Big Move?

Barring a move to Iowa, which WalletHub said has the lowest rates, Hodge say the “power to the consumer is the ability to shop.” Hodge argues that, “even if you have been with someone for a long time, checking and looking at new companies could save a lot of money.”

WalletHub said these five have the cheapest rates: Progressive, GEICO, State Farm, The General and Nationwide.

You Must Have a Car

Finally, acknowledges that many people must have a car. Indeed, in my 20s and 30s, I worked in rural areas and had to have a car in order to earn a living. But, if you move to an urban area and can ditch the car, or, if say you find a way to have one instead of two cars in your family, the savings are enormous.

I ditched our car when my wife, the ever-comely Suzanne Hall and I, moved to Kew Gardens, Queens some 30 years ago. We have literally saved hundreds of thousands of dollars, which improved the quality of our lives in countless ways. This included the ability to save and invest more as well as being able to spend a lot more on ourselves. This included wonderful trips abroad and around the United States, all of which we paid for without paying interest on our credit cards.

Cars, especially in a big city like New York, are often an expensive luxury. When I want or need a car from time to time, I rent one for a few days, return the car and then the big bills stop. City and state officials here, although they would never admit this, target car drivers almost every time they need more tax revenue (Mostly because they have mismanaged the money they already get).

As I write this, the state is planning a new tax on drivers who come into the middle of the city on business days. Imagine, if you drive into New York from the suburbs to earn a living, in addition to endless tolls, you’ll have to pay still another tax. I’m sure drivers often ask themselves, “does the taxing ever end?”

But Is There Anything I Can Do If I Must Buy Car Insurance?

Experts offer these tips.

*Get a car that is cheap to cover

*Use discounts. Sometimes discounts are available for vets, those who have paperless statements, have an anti-theft system or a good driving record.

*Have good credit. “People with no credit pay 67 percent more than people with excellent credit,” WalletHub said.

*Consider a high deductible. Some insurers offer lower monthly rates if you use this option

*Review local companies. Some insurers only covering a limited area have cheaper rates.

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Gregory Bresiger
Gregory Bresiger

Gregory Bresiger is an independent financial journalist from Queens, New York. His articles have appeared in publications such as Financial Planner Magazine and The New York Post. The eBook version of his latest book "MoneySense" is available now for Free Download by clicking HERE

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