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Honk if you like having below average car insurance rates

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A new study finds that Minnesota motorists pay less than the national average for their auto insurance.

The Star Tribune reports that in 2010, it cost an average of $693 to insure a Minnesota car, almost $100 lower than the national average of $791. The study by the Consumer Federation ranks Minnesota No. 32 for auto insurance costs.

But what Minnesota drivers pay for car insurance has gone up 51 percent since 1989, slightly below the median 56 percent increase. Mark Kulda, spokesman for the Insurance Federation of Minnesota, said Minnesota drivers actually pay less for car insurance now than they did in 2003, when the average auto policy was $809.

The Omaha World Herald noted that Nebraskans paid the highest rates in the nation. It said that in 2010, Iowa's average insurance spending was the lowest in the nation at $644.63.

Why the discrepancy in the same region of the country?

The Consumer Federation concluded that states that require rate hike approval before insurers can impose them, such as California, have kept costs down better than states with weaker systems, such as Minnesota. Minnesota requires insurers to file rate changes with regulators, but they are not required to get their approval.

California is the only state where the average driver's car insurance policy has fallen since 1989. If every state adopted California’s approach, U.S. consumers could save more than $350 billion over the next decade, the report concludes.

The Insurance Federation of Minnesota, which represents property and commercial insurers, said the study ignores key differences between states that can affect costs. Kulda said Minnesota has a mandated minimum liability limit of $30,000 per person per accident, or $60,000 per accident if there’s more than one person in the vehicle. It’s half that in California, meaning insurers pay out less.

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