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According to statistics gathered by Insurance.com’s RateWatch for Car Insurance, auto insurance rates are down across the United States. In some states, the drop is dramatic: average annual premium decreases of nearly 30% have been reported in Vermont, Maine, Wisconsin, and Iowa. Decreases of around 20% have occurred in South Dakota, New England, Illinois, and Tennessee.

Most states are seeing a more modest decrease in auto insurance premiums, between 1 and 5%. So, what accounts for the dramatic decrease in costs being seen nationwide?

With the recession causing hundreds of thousands of workers to lose their jobs in the past two years, many people are cutting expenses wherever they can, and auto insurance is one that can decrease a family’s expenses by hundreds of dollars a month. It is estimated that by 2010, 1 in 6 drivers will be driving without auto insurance.

Insurance companies are responding to this change in the market by decreasing rates in order to retain drivers. More people are shopping around online to find cheaper auto insurance quotes, and insurance companies are hoping that people realize the importance of car insurance and will continue to pay for insurance if they can get a good rate.

In some areas of the country, auto insurance rates have decreased recently as a result of new legislation in addition to economic factors. In California, insurance commissioner John Garamendi passed a statute which requires insurance companies to base premiums on drivers’ records and miles driven rather than on their zip code.

A spokesman for State Farm Insurance has cited yet another reason for the current decrease in rates: claims are down. “Whether it’s because of the aging population, better law enforcement, safer cars or some other reason,” said Bill Sirola, “our projections of what we were going to have to pay in losses are just not coming true.”

Regardless of the reasons for decreasing auto insurance premiums, the situation is good for consumers, and there are several compelling reasons not to drive without insurance. Most notably, uninsured drivers can end up hundreds of thousands of dollars in debt if they are found at fault in a serious accident resulting in destruction of vehicles and injury.

Even if accidents are avoided altogether, driving without insurance is illegal in all 50 states, and penalties for offenders are steep. A citation for driving without insurance will also result in dramatically increased insurance rates in the future.

Auto insurance rates are dropping due to a number of factors, and it is now easier than ever to shop for an auto insurance quote online. It is worth the trouble to find an affordable rate rather than canceling auto insurance altogether.