Auto insurance rates in North Carolina rank sixth-lowest among all states, one rung down from fifth-lowest previously, according to the latest nationwide data.

Or not.

By another measure, the rates paid by North Carolina motorists rank eighth-lowest, according to the state Insurance Department.

Either way, the department is pleased with the ranking because the other states ranked among the 10 lowest in auto rates are less densely populated than North Carolina, said spokeswoman Chrissy Pearson.

"The higher density the population is, the more cars you have on the road, and the more likely you are to have accidents," she said.

The latest data compiled by the National Association of Insurance Commissioners show that, in 2005, the average auto insurance premium in North Carolina was $602.20. That's lower than all but five states: Idaho, Iowa, Kansas, North Dakota and South Dakota.

The amount is the average consumers pay for auto insurance, which can include liability, collision and comprehensive coverage.

But the NAIC data doesn't include the surcharge that policy holders pay to subsidize coverage for drivers deemed too risky to insure. Those drivers are relegated to the state-created N.C. Reinsurance Facility for liability insurance.

Adding the surcharge would drop the state's ranking to eighth lowest, said Kevin Conley, the insurance department's chief actuary.

The surcharge is levied on liability insurance only. The average surcharge in 2005 was 11.2 percent of the liability bill, which would increase the average bill to $637.98, Conley said.

The NAIC cautions that state-by-state comparisons are tricky because so many factors affect premiums, such as accident rates, traffic density, auto theft statistics, repair costs and state laws. But Insurance Commissioner Jim Long is fond of touting the state's ranking.

Joe Stewart, executive director of the Insurance Federation of North Carolina, which represents property and casualty insurers, contends that including the surcharge gives a better picture of where the state stands.

Stewart calls it "a hidden subsidy to cover an inadequate premium paid by higher-risk drivers."

Highlighting the surcharge also ties in with the Insurance Federation's political agenda. That group backed a bill, introduced this year by Senate Majority Leader Tony Rand, that would have required insurers to disclose the amount of the surcharge in drivers' bills -- which isn't permitted under current law.

That bill, which was passed by the Senate but never was voted on by the state House, was viewed by consumer advocates and Long as part of a broader effort aimed at overhauling the way the state sets auto insurance rates. Rand also introduced a bill that would have done just that but later decided to create a study commission to scrutinize the issue.

The current surcharge rate, which went into effect when policies are renewed beginning Oct. 1, is 2.76 percent -- or about $11 for the average liability policy. That's down from 9.8 percent previously.

Today's significantly lower surcharge, Pearson said, is a sign that the system is "self-correcting."