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Why do car insurance premiums increase in some zip codes?

  • Auto Insurance
  • Xavier Sabastian
  • 7 minutes

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The time has come to unveil the truth about car insurance prices by ZIP code. Your ZIP code will be evaluated by insurance companies. This is based on crime rates, car accident records, road conditions, and population density.

Rural ZIP codes have lower average rates than urban ZIP codes because drivers in rural areas are less likely to be involved in an accident or become victims of auto theft.

When calculating your car insurance premium, auto insurance companies use a variety of factors. But does your ZIP code affect your auto insurance? Undoubtedly, it does. Comparing car insurance quotes by ZIP code can yield unexpected outcomes. For example, when comparing auto insurance rates by ZIP code, you will find that costs vary by location and city.

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A simple move across the street could modify your rate in a large city if it places you in a different ZIP code. This can make it difficult to get affordable auto insurance in your city. This may seem odd, but insurers generally factor claims, accidents, and crime rates for a certain area into their calculations.

You are mistaken if you believe your driving record or the car you drive has a greater impact on your car insurance premiums than your zip code. 

Even in California, where decades-old Proposition 103 requires insurers to weigh driving experience more seriously than zip codes, the five-digit number that tells the post office where you reside can cost you thousands of dollars or save you thousands.

Car insurance is one of the essential expenses for drivers. While no one likes paying for it, when you need it, it may save you a small fortune in legal fees, repair costs, and medical bills. 

However, rates can vary across individuals who reside only a few miles apart.

What is a ZIP code for insurance, and why is it important? 

Other variables, such as theft and vandalism rates, can significantly impact auto insurance premiums by ZIP code. And if you opt for complete coverage instead of liability coverage, you will notice a significant price difference.

What is a ZIP code for insurance, and why is it important? 

Do zip codes impact your car insurance premiums?

Numerous variables influence auto insurance premiums. The location of your home is a significant aspect. We do not simply mean your state or city. Your ZIP code will affect your typical auto insurance premium.

When you compare insurance prices by ZIP code, you will find that auto insurance costs within the same local areas might vary significantly dependent on the ZIP code. When calculating your risk, auto insurance providers will include information from your neighborhood. Specifically, statistics on car accidents, crime rates, and population density will be examined.

ZIP codes with a greater incidence of auto theft, fatal accidents, and population density are frequently categorized as high-risk. Therefore, your annual average insurance premiums will climb if you reside in a high-risk ZIP code.

However, if you live in a lower-risk ZIP code, your vehicle insurance rates will be lower.

Zip codes where car insurance premium rises and falls

Currently, the most costly neighborhoods are in Detroit, Michigan, Brooklyn, New York, and New Orleans, Louisiana. The average annual cost of auto insurance in New Orleans’s 70117 Zip code is $9312. In Brooklyn, New York, residents of the 11212 Zip code earn an average of $10,770 a year.

Unfortunately, residents of the 48201 Zip code in Detroit, Michigan, pay three times as much as Brooklyn residents for auto insurance, with average yearly rates reaching $30360.

According to our research, residents of Lexington, Virginia, Anahola, Hawaii, and Tiffin, Ohio have some of the lowest annual auto insurance premiums in the country.

Average annual auto insurance premiums in the 44883 Zip code in Tiffin, Ohio, are $2331. Residents of the 96703 Zip code in Anahola, Hawaii, pay a low annual cost of $2199. The average annual premium for drivers in the 24450 Zip code in Lexington, Virginia, is $2028.

There are numerous strategies to reduce your annual rates if you reside in a high-priced ZIP code. Seek out discounts, compare prices from several insurers, and purchase only the amount of coverage you require.

Much more than your ZIP code affects your auto insurance prices. For instance, your driving record and age are also relevant factors. 

Some jurisdictions prohibit insurance firms from using ZIP codes as a determining factor.

Do Zip Codes impact your Car Insurance Premiums?

Can your ZIP code reduce your car insurance premiums?

You may not be able to change your location readily, but you may still influence several other factors that will cut your insurance premiums. One of the easiest things you can do is search for firms that give discounts on goods you have already purchased. The more auto insurance discounts you qualify for, the more money you’ll save.

Long-term, maintaining a high credit score, avoiding traffic fines, and not filing accident claims can also help you minimize insurance premiums. 

Despite this, in most states, you will still be assessed in part based on your ZIP code. Therefore, if you ever intend to relocate, you should consider your insurance prices and conduct preliminary research.

Of course, insurance providers are all different. You will discover that some provide you with an excellent pricing package and programs, while others do not. You may discover that the firm with the lowest price does not provide the finest service. In this instance, spending slightly more on your insurance policy may be worthwhile.

Even in an expensive ZIP code, comparing auto insurance quotes could help you save a significant amount of money over a year. 

Moreover, you must ensure that you still have adequate coverage. When shopping around, it is crucial to consider both insurances by ZIP code and reviews of the firm.

A reputable independent agent or online insurance quotation site can save you a great deal of time by assisting you in locating the most affordable auto insurance rates in your ZIP code.

Affordable premiums through Way.com

Way.com examined zip codes based on a hypothetical driver and discovered that assuming all other things are the same, where you reside can contribute to an 82% percent difference in your annual premium, from $741 to $4227. 

In California, where zip codes are not permitted to be the primary rating factor, the variation was somewhat less pronounced, with premiums for an identical driver varying from $1008 to $2412 based solely on their zip code.

The results also indicated the importance of comparison shopping for coverage. 

What did we find?

We surveyed major insurers, such as State Farm, Progressive, and Allstate, using a single zip code in the heart of Los Angeles to determine the extent of company-to-company pricing variation for this hypothetical driver. Annual fees ranged from $1119 to $3147.

Way.com enables you to compare the average rates in your zip code to those of the state and surrounding towns. Enter your zip code to discover the average rate in your neighborhood.

The distinction can be significant. For example, consider a Bullhead City, Arizona resident directly across the river from Laughlin, Nevada. 

According to the data, Bullhead is the most affordable city to get auto insurance. 

This example driver’s annual car insurance premium would be $741.¬†However, the annual charge would increase to $1286. This if the car was parked on the opposite side of the river, just a ferry ride away.

Notably, six of the ten cities with the cheapest auto insurance rates are in Maine, while four are in Arizona. The most expensive places to get insurance are likewise concentrated in several regions. New York has five of the costliest auto insurance premiums, while Michigan has four. Only one city in Texas, Allison, ranks among the most expensive. This hamlet is located atop the world’s largest helium-producing gas field.


Here’s more info on¬†top-rated airport parking,¬†the best parking spots in your city, affordable¬†auto insurance, easy¬†Auto refinance, and¬†high-quality car washes near you.


 

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