New Data Reveals the States Most Financially Vulnerable to Totaled Cars
Totaled-Car Losses Outweigh Typical Annual Household Income in 10 States, Study Finds
Replacing a totaled vehicle can cost more than a typical household’s annual income in 10 states, increasing the financial strain on drivers without adequate insurance coverage.
A September study by Whitley Law Firm ranked Mississippi as the state where households are most exposed to the loss of a vehicle, based on average vehicle costs, median household income, insurance premiums, uninsured-driver rates and collision-coverage adoption.
In Mississippi, the study put the average vehicle cost at $34,130, compared with median household income of $27,205. That equates to a vehicle loss equal to 125.5% of annual household income. The state also had the highest uninsured-driver rate in the study, at 28.2%, while 73.7% of insured drivers carried collision coverage.
Louisiana ranked second, with an average vehicle cost of $35,893 and median household income of $29,921, making the value of a typical vehicle nearly 120% of annual household income. Its average annual insurance cost, at $1,754, was the highest among the 10 states listed.
Arkansas, West Virginia and Montana rounded out the top five. In Arkansas, average vehicle costs were $36,343, or 118.5% of median household income, while 66.9% of insured drivers had collision coverage. West Virginia’s average vehicle value was $33,761, compared with median household income of $29,140. Montana recorded the highest average vehicle cost among the top five at $38,943, against median household income of $35,369.
The remaining states in the ranking were Alabama, Oklahoma, Kentucky, Wyoming and Idaho. In each, the report calculated that the average vehicle represented more than a year of median household income.
Collision coverage, which generally pays for damage to a policyholder’s own vehicle after a crash, was not universally held among insured drivers in the states identified. Wyoming had the lowest collision-coverage adoption among the group after Arkansas, at 68.6%, despite reporting the highest average vehicle cost in the full top-10 list, at $41,405.
Robert E. Whitley of Whitley Law said rising repair expenses may contribute to more vehicles being declared total losses. He said modern vehicles’ technology and higher repair costs can push repair estimates beyond insurers’ total-loss thresholds, while settlements based on depreciated market values may not cover replacement costs.
Whitley Law’s analysis examined all 50 states and calculated vehicle-loss exposure by comparing average vehicle costs with median household income, while also tracking insurance costs, uninsured-driver rates and collision-coverage uptake.