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Alaska – factors that led to 55% increase in insurance rates

Alaska is the 27th most expensive auto insurance state in the country. With an average auto insurance premium of $1455, the insurance rates in Alaska are close to the national average, i.e., $1496. Over the past quarter, auto insurance expenditure in Alaska has, however, risen by more than 55%. In 1989, the average insurance expenditure was $560.27, while the expenditure in 2010 is $890.35. There has, thus, been a 58.9% change from 1989 to 2010. The national auto insurance average expenditure in 2010 is $791.22.

It is a well-known fact that auto insurance rates are determined by your age, gender, location, and some other forces beyond your control: state regulations, the theft rate in your area, and competition in the marketplace. Let us consider these factors in Alaska to understand how they have shaped insurance rates in this state.

State regulations

The state of Alaska follows the ‘flex’ regulatory law. In an attempt to provide price stability for the drivers, ‘flexible rating’ (flex-rating) combines the principles of prior approval, use-and-file and file-and-use ratings. Insurers can put prices into use without giving notice to the state if the rate change is within a particular range. Outside this allowable range, prior approval of rate changes is required. That is, rate revisions within a designated percentage flex band may be used without approval, while those outside the band must be authorized by the regulator. Percentages range from 5 % to 25 %.

The average change in insurance rates is 66.8% for states that follow the flex regulatory system. In Alaska, there is a 58.9% increase from 1989 to 2010. The states that have adopted the ‘flex’ system have experienced the second highest change in average insurance rates. The maximum change is witnessed by the states that follow the deregulatory system.

Motor vehicle theft rate

Auto insurance rates go up in areas where theft rates are on the rise. In Alaska, 625 vehicles were stolen in 2011. Insurers have to dole out settlements for stolen cars, so their total expenses increase. They make up for this by increasing the premiums.

Percentage of uninsured drivers

In Alaska, 13% of the motorists are uninsured. There are 24 states with a higher percentage of uninsured drivers in the country.  This percentage matters because insurers factor these in while deciding premium rates. In states where there are higher percentages of uninsured drivers, the insurance rates also tend to be high.

Competition intensity

The Herfindahl-Hirshman Index (HHI) is used to measure competitiveness in a market. Competitive states have a higher market concentration than the not-so-competitive ones. The HHI works like this: the higher the HHI, the competition in the market is typically lower.

According to the Department of Justice, competitive marketplaces have scores of less than 1,000 on the HHI, while moderately concentrated marketplaces fall within the 1000-1800 range. When a state scores more than 1800, it is a highly concentrated marketplace.

Alaska’s HHI is 1672, which means that it is less competitive and moderately concentrated.

The financial consequences of accidents and DUIs in Alaska

The state of Alaska mandates that all drivers and vehicle owners must carry with them proof of owning liability insurance at all times. The insurer must provide vehicle owners and drivers with a card that indicates that you own the correct policy.

The average insurance premium in Alaska is $1455. If you are caught driving without insurance, you may be liable to hefty fines and loss of driving privileges and vehicle registration.  

Alcohol-related accidents are a major concern in Alaska. According to the U.S. Department of Transportation, National Highway Traffic Safety Administration (NHTSA), alcohol impairment contributed to 29 % of the fatalities in 2011 and to 25% of the total fatalities in 2012.

Driving under the influence (DUI) is a very serious charge. In Alaska, as with most U.S. states, you are considered legally drunk if your blood-alcohol content (BAC) is .08% or higher. If a driver is caught driving drunk, stringent penalties will be imposed. First time offenders will have to pay a fine up to $1500 which can increase to $10000 for repeat offenders and imprisonment of 3 days and can go up to one year for subsequent offences.

DUI convictions also have a direct impact on your insurance premiums. Insurers feel the need to increase your premium, since they consider you a high-risk driver. After your first DUI conviction, your premium could go up to $2706. For repeat offenders, this could be even higher. Taking a defensive driving course could reduce this number to $2300.

Most companies also increase your premium according to the surcharge schedule of the Insurance Services Office (ISO). In Alaska, your premium could increase to $1746 for the first two vehicles on a multi-car policy, and up to $2037 for a single-car policy.

Accidents also have an adverse impact on your premiums. A single accident that causes serious injuries or major property damage could raise your premiums to an amount between $2183 and $2910 after your next policy renewal.

Insurance cost of used full-size pickup trucks less than mid-size family sedan in Alaska

Nissan Altima ranks among the 10 best affordable mid-size cars in the US. If you are looking for a used family sedan in the state of Alaska this might be your best bet. On the other hand, if you are looking for a full-size pickup truck, you can choose between the Ford F-Series and Chevrolet Silverado, which have managed to impress both reviewers and owners.

So, what are the factors you need to consider while choosing between these cars? Below is a chart which gives us the insurance average and median price of these vehicles in Anchorage, Alaska. The figures provided are for the cars that have been manufactured and sold between the years 2005 and 2012.

State Make and Model Insurance Average ($) Median Price ($) Insurance %
Alaska Nissan Altima 1,420 17,998 7
Alaska Ford F-Series 1,349 28,900 4
Alaska Chevrolet Silverado 1,270 28,998 4

If your priority is a family sedan and Nissan Altima is within your budget, you must note that this car is available at a median price of only $17,998. There is a difference of more than $10,000 between its median price and that of the Ford F-Series and Chevrolet Silverado. The insurance average is also $1,420 available at an insurance percentage of 7%. If you take note of this, insurance wise this car will prove to be more expensive than the full size pickup trucks in Alaska.

If the high upfront cost of the used Ford F-Series or Chevrolet Silverado in Alaska is not a concern you can actually go for one of these vehicles. Let us make a comparison between these two. The insurance percentage of these vehicles is exactly the same, with the used Ford F-Series commanding a slightly higher insurance average. There is hardly any difference between the upfront costs so it is the insurance cost that should be the deciding factor. But, if you prefer one brand more than the other then do not hesitate to go for it, because the difference in costs is negligible.

Alaska Auto Insurance Rates

Below are the minimum, average and maximum insurance rate estimates for neighbourhoods in and around Alaska, AK.

Lowest Rate:$1,100
Average Rate:$1,500
Highest Rate:$1,900

Recent Savings From Top Providers in Alaska

Rank Customer Zipcode Amount Saved
1 99784 $362
2 99501 $355
3 99502 $353
4 99503 $351

Compare Auto Insurance Companies in Alaska

Company A.M Best Rating on
Financial Strength
Year Founded
Progressive Direct® A+ 1937
State Farm A++ 1922
Allstate A+ 1931
GEICO A++ 1936

Alaska Auto Insurance Requirements

Minimum limits of liability for auto insurance in Alaska as per AK State Laws

Bodily Injury Liability

  • $50,000 for death/injury of any one person, per accident.
  • $100,000 for all persons per accident.

Property Damage Liability

  • $25,000 per accident.

Alaska Car Insurance Average Rates by Make

In addition to the location, one key factor that contributes to the insurance rates in Alaska is the vehicle's make and model. Especially the vehicle's theft rates in Alaska

MakeInsurance Average PremiumView Details
MakeInsurance Average PremiumView Details

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