Why are auto insurance rates higher in some ZIP codes?
Why are insurance costs higher in some ZIP codes? Auto insurance costs by ZIP code vary greatly due to high crime rates and traffic statistics that make it riskier for insurance companies to insure you.
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Brad Larson
Licensed Insurance Agent
Brad Larson has been in the insurance industry for over 16 years. He specializes in helping clients navigate the claims process, with a particular emphasis on coverage analysis. He received his bachelor’s degree from the University of Utah in Political Science. He also holds an Associate in Claims (AIC) and Associate in General Insurance (AINS) designations, as well as a Utah Property and Casual...
Licensed Insurance Agent
UPDATED: Sep 20, 2024
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Advertiser Disclosure: We strive to help you make confident auto insurance decisions. Comparison shopping should be easy. We are not affiliated with any one auto insurance provider and cannot guarantee quotes from any single provider.
Our insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.
UPDATED: Sep 20, 2024
It’s all about you. We want to help you make the right coverage choices.
Advertiser Disclosure: We strive to help you make confident auto insurance decisions. Comparison shopping should be easy. We are not affiliated with any one auto insurance provider and cannot guarantee quotes from any single provider.
Our insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
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- Auto insurance rates vary wildly by ZIP code in some areas and certainly by state
- Crime rate affects auto insurance rates. Areas with high crime rates typically pay more for auto insurance.
- Location isn’t the only factor for your rates. Your driving record, credit history, and commute length are also important.
Car insurance is one of the necessary evils of our society; no one really likes paying for it, but when you need to use it having car insurance can end up saving a small fortune in legal expenses, damage claims history, and medical treatment costs. However, rates can differ between two people even when they live only a couple of miles away.
What is an insurance ZIP code, and why does it matter? Auto insurance costs by ZIP code can be very different because of other factors like theft and vandalism rates which vary. And if you get full coverage versus liability coverage only, you’ll see a big difference in your prices.
In this article, we will take a look at why the average cost of insurance is higher in some ZIP codes and try to shed some light on how the best auto insurance companies work to ensure they offer a competitive price for everyone by mitigating the risk that some drivers bring to the table.
Compare car insurance rates now for your area by using our FREE tool. Before learning why annual premiums for insurance are higher in some ZIP codes, enter your ZIP code above and get quotes from multiple insurers.
Are car insurance rates based on ZIP code?
Auto insurance rates are based on many factors. If you get personal liability insurance only versus also having collision and comprehensive, there’s a change in your rates. Other factors include your credit score, driving history, and yes— your location.
Does ZIP code affect car insurance? Insurance companies base your rates upon a variety of factors. These include your driving record, credit history, and commute length. But they also look at your location.
Some of this is due to the crime rate which affect auto insurance rates. If there’s a higher rate of theft and vandalism, that will spike your rates in your ZIP code.
Insurers review your insurance by ZIP code to see how much your rates should be. There’s a big difference sometimes. For example, the cheapest rates in California are in 93401 at an average $2,731/ year compared to 90210 which averages $6,324.83/ year. That’s more than twice as much within the same state.
Read more:
Auto Insurance Rates by State
Just like with ZIP code, your rates vary by state. But by state it can vary even more. The most expensive rates in the country are in Detroit, where you might expect to pay over $30,350.09/ year compared to Iowa which averages $672.01/ year. Those aren’t typos.
The table below shows the average annual rates for car insurance for each state. You can see just how that amount varies state-to-state by these rates from the National Association of Insurance Commissioners.
Average Annual Auto Insurance Rates for Full Coverage by StateSTATE | Average Annual Auto Insurance Rates |
---|---|
Alabama | $817.95 |
Alaska | $1,048.60 |
Arizona | $932.10 |
Arkansas | $869.37 |
California | $926.79 |
Colorado | $898.79 |
Connecticut | $1,108.67 |
Delaware | $1,186.33 |
District of Columbia | $1,307.62 |
Florida | $1,206.46 |
Georgia | $964.70 |
Hawaii | $856.33 |
Idaho | $656.95 |
Illinois | $833.44 |
Indiana | $724.65 |
Iowa | $672.01 |
Kansas | $819.14 |
Kentucky | $904.39 |
Louisiana | $1,326.78 |
Maine | $679.56 |
Maryland | $1,077.97 |
Massachusetts | $1,075.35 |
Michigan | $1,252.27 |
Minnesota | $826.64 |
Mississippi | $935.08 |
Missouri | $825.40 |
Montana | $842.54 |
Nebraska | $778.81 |
Nevada | $1,057.63 |
New Hampshire | $777.98 |
New Jersey | $1,353.96 |
New Mexico | $896.58 |
New York | $1,300.09 |
North Carolina | $745.17 |
North Dakota | $737.63 |
Ohio | $741.11 |
Oklahoma | $941.34 |
Oregon | $855.57 |
Pennsylvania | $934.34 |
Rhode Island | $1,219.29 |
South Carolina | $910.51 |
South Dakota | $717.73 |
Tennessee | $823.74 |
Texas | $1,025.64 |
Utah | $832.24 |
Vermont | $737.67 |
Virginia | $807.71 |
Washington | $923.16 |
West Virginia | $1,015.57 |
Wisconsin | $696.11 |
Wyoming | $816.71 |
What are the states with the cheapest car insurance? These are typically rural states with lower crime rates.
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Why do collisions & accidents increase auto insurance rates?
The first – and probably most obvious – scenario responsible for raising car insurance rates in certain ZIP codes is the collision and accident rates in the area. Auto insurance companies have access to a ton of data on collisions, and they are easily able to calculate their areas of higher and lower risk right down to individual street corners in cities large and small.
If you live or are likely to drive through an area that has a high accident risk, you can be sure that your car insurance company knows about it, and that they are going to charge you accordingly to mitigate the risk of an expensive payout.
Why do auto theft & vandalism increase auto insurance rates?
The other main driver of upward pressure on car insurance costs in certain ZIP codes is the risk of auto theft or vandalism. As you can likely well imagine, there are areas of the country that are far more prone to auto theft than others.
Large port cities, where cars can be “chopped”, have their identification numbers and tags removed, and put onto ships destined for foreign countries have far higher car theft rates than cities that are landlocked and have smaller populations where everyone tends to know one another.
Larger cities also tend to have more instances of vandalism that smaller ones. While riots and outright civil unrest is rare anywhere in the country, minor vandalism ranging from smashed windshields and headlights to keys run over the paint happens on a second by second basis in cities across the map.
If these items have to be taken care of on a regular basis by auto insurance companies, they will most certainly raise the insurance rates in that area.
What are local costs to auto insurance companies?
Insurance companies must deal with a number of local cost factors, all of which they are apt to pass down to their policyholders in an effort to keep their overall costs down. Some cities and states charge a variety of taxes to insurers, which drives up the cost for everyone and must be split among the customer base.
Many times, there are random local risk factors that are in play as well. Did you know that there are certain areas of your city and state that – for no documented reason – simply have higher instances of running red lights, speeding, drunk driving, and other infractions? Insurance companies know this, and they raise the rates of drivers residing in those ZIP codes because of it.
Read more: Does running a red light increase your auto insurance rates?
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What are some other miscellaneous factors that impact auto insurance rates?
There are a number of miscellaneous factors that can cause insurance costs to be higher in some ZIP codes over others. The risk of natural disasters such as tornadoes, floods, and earthquakes can greatly increase the amount of money that auto insurance companies must pay out to policyholders on an annual basis.
If you live in tornado alley expect that your insurance costs will be higher than someone who lives in a more calm part of the Midwest. Your commute distance can also affect your insurance rates, so it might be worth looking at these U.S. cities with short commutes.
Why should you talk to your auto insurance company before you move?
Finally, it’s a very good idea to give a quick call to your auto insurance company before you move to determine the cost of auto insurance in your new city or suburb. While you might think that there’s little you can do about any increases in your car insurance – that’s not entirely accurate.
Any time your insurer is going to raise your rates is an excellent time to take a look at the other insurance companies in your local market to see what they offer and what kind of deals you can score for transferring over. Don’t become tied to any one insurance company – if they’re starting to charge you too much for your insurance, it’s time to move on.
Now that you’ve learned about auto insurance costs by ZIP code, to get started with finding the best possible auto insurance rates in your area, scroll up to the top of this page and enter your ZIP code in the form. You’ll get FREE quotes from multiple insurers.
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Frequently Asked Questions
Why do auto insurance rates vary by ZIP code?
Auto insurance rates can vary by ZIP code due to several factors that insurers consider when determining premiums. These factors include the frequency of accidents and thefts, population density, road conditions, crime rates, and even the availability of repair shops in the area. Insurance companies analyze historical data and statistical information specific to each ZIP code to assess the level of risk associated with insuring vehicles in that location.
What role does population density play in determining auto insurance rates?
Population density is an essential factor in setting auto insurance rates. In areas with higher population density, such as cities, there tends to be more traffic congestion, which increases the likelihood of accidents. Additionally, densely populated areas may have higher rates of theft and vandalism. Due to these increased risks, insurers often charge higher premiums to cover potential losses.
How do accident rates affect auto insurance rates in different ZIP codes?
Accident rates significantly impact auto insurance rates in different ZIP codes. Some areas may have a higher frequency of accidents, whether due to heavy traffic, dangerous intersections, or other factors. Insurance companies consider these accident rates when determining premiums because a higher likelihood of accidents means a higher risk for claims. Therefore, ZIP codes with higher accident rates generally face higher insurance rates.
Do crime rates in a ZIP code affect auto insurance premiums?
Yes, crime rates within a ZIP code can affect auto insurance premiums. Areas with higher crime rates, including car theft and vandalism, pose a greater risk to insurers. Cars in these areas are more likely to be stolen or damaged, resulting in potential claims. To account for this increased risk, insurance companies may charge higher premiums in ZIP codes with elevated crime rates.
How does the availability of repair shops impact auto insurance rates in certain ZIP codes?
The availability of repair shops can influence auto insurance rates in specific ZIP codes. Insurance companies consider the proximity and accessibility of repair facilities when determining premiums. In areas where repair shops are scarce or located far away, the cost of repairs and potential delays may increase. As a result, insurance rates may be higher in such ZIP codes to account for these factors.
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Brad Larson
Licensed Insurance Agent
Brad Larson has been in the insurance industry for over 16 years. He specializes in helping clients navigate the claims process, with a particular emphasis on coverage analysis. He received his bachelor’s degree from the University of Utah in Political Science. He also holds an Associate in Claims (AIC) and Associate in General Insurance (AINS) designations, as well as a Utah Property and Casual...
Licensed Insurance Agent
Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.