EDISON - The Garden State has the most expensive insurance rates in the country, according to a new report.

The National Association of Insurance Commissioners says New Jersey motorists paid an average of $1,220 in 2012. That's about 49 percent more than the national average of $815.

AAA New Jersey spokeswoman Cathleen Lewis says a bad economy and New Jersey’s road conditions can lead to the higher rates.

“If the economy is good, a lot of people say ‘I’m not going to report. I have a $500 deductible and I’ll just eat it so I can keep my rates low,’” Lewis explains. “In a bad economy, every dollar matters.”

This leads to more claims, which then leads to higher premiums.

Lewis says potholes on New Jersey roads also contribute to the higher rates. Potholes can lead to car accidents and damage, driving insurance rates to increase.

New Jersey lawmakers reformed insurance regulations over 10 years ago. This increased competition as more companies offered insurance in the state.

The cheapest state for insurance is Idaho, according to the report. The average rate there is $535 a year.