With annual premiums averaging around $1,328, Massachusetts ranks 35th in the country for auto insurance costs. These premiums are more affordable than neighboring Connecticut, New York and New Hampshire, although many states throughout New England have lower premiums. Any individual policy may cost more or less than the state average depending on driver-specific factors. Massachusetts is governed by some unique insurance laws that are not evident in other states, which heavily influences the cost of premiums as well as what insurance companies are available in the area. By taking the time to understand why Massachusetts insurance costs what it does, a driver can make the best choice in choosing an insurance company.

What Determines the Cost of Insurance in a State?

Auto insurance premiums are calculated based on dozens of factors. On a personal level, an individual driver’s age, gender, marital status, credit score and driving history will influence the cost of his insurance. Insurance is also calculated based on state-specific factors, such as the number of uninsured drivers in a state, how many DUI-related accidents occur in a year, the type of weather in an area and the crime rate of the state. State-specific insurance laws also play a key role in determining the cost of premiums in an area.

Massachusetts has the lowest rate of uninsured motorists of any state. Less than 5 percent of Massachusetts drivers operate without auto insurance. Drunk driving is also not a major concern in the state; in 2009, only 130 people were killed in drunk-driving accidents, accounting for 39 percent of all traffic fatalities. Auto theft is a concern in Massachusetts, although theft rates have reduced dramatically in the past 20 years.

Massachusetts-Specific Insurance Laws

Overall, Massachusetts has low risk factors for auto insurance. Why, then, do premiums cost more than in other states? The major factor influencing the cost of insurance in the state is actually state legislation that limits insurance coverage throughout the state.

In most states, insurance companies can set their own rates. Auto insurance in Massachusetts is regulated by the government, and rates are traditionally the same regardless of what company is providing coverage. Traditionally, very few insurance companies provided policies in Massachusetts due to these limitations. Recently, Massachusetts has relaxed its laws slightly to allow companies slightly more freedom in setting premiums, and more big-name insurance companies have begun selling coverage in the state.

As more companies begin providing coverage in the area, competition will allow rates to drop somewhat. Nevertheless, the state does still control the cost of coverage to some degree, so insurance in Massachusetts remains largely determined by state laws.

Auto Insurance Requirements in Massachusetts

Massachusetts requires all drivers to purchase liability insurance in order to register a vehicle. The property damage liability insurance must have a limit of at least $5,000. Bodily injury liability must have limits of at least $20,000 per person and $40,000 per accident. Higher limits are a good idea for insureds who can afford them, as drivers may be held personally liable for damage incurred over the insurance limit.

Because Massachusetts is a no-fault state, drivers must also carry personal injury protection (PIP) coverage of at least $8,000. Any time a person is involved in an accident, his own injury insurance must be primary in handling his injuries and paying for lost wages. Additional PIP limits can be purchased if the driver wishes.

Collision and comprehensive coverage are both available to cover damage caused to an insured vehicle. These are required for vehicles that are leased or financed, but all new or valuable vehicles should carry first-party coverage to repair damage. Older vehicles or those not worth repairing do not need collision and comprehensive insurance.

Uninsured motorist coverage is also available, although the low number of uninsured drivers in the state may make it unnecessary for many individuals. Drivers can also choose to purchase rental reimbursement coverage and roadside assistance insurance as well if their insurance companies offer these products.

As more car insurance companies begin to offer policies in Massachusetts, the cost of insurance will begin to decrease somewhat. It’s important to select an auto insurance company that provides coverage in the state. Several state-specific local companies exist that can provide coverage, and some major insurers like Liberty Mutual and Allstate have started offering policies there as well.

You can identify local insurance companies by submitting a quote online; once you’ve filtered the results to insurers in Massachusetts, you can select the company that will provide coverage that will best suit your needs.