Have you ever seen a huge difference in your car insurance quote just to move within the same city? The reason is that some areas may be riskier to drive in than others. Therefore, your zip code could cause your rates to climb, or drop depending on where you go.
Risk Determines Insurance Rates
In general, your auto insurance rate is determined by the risk of insuring you. You probably already knew that things like speeding tickets and accidents will usually make your rates go up. You're also probably familiar with rates being different in different states due to things like different laws and insurance risks. What you may not have known is that the risk of insuring you can be greatly different even if you move only a few blocks. Even with in the same city, driving risks can vary considerably.
Why Different Zip Codes Get Different Insurance Rates
Insurance companies use complex models to determine how likely it is that you'll file a claim. In addition to the big picture items above, it can include localized issued like the following.
- Theft and vandalism reports in your neighborhood
- Dangerous intersections and roads
- Larger claims due to more expensive cars being involved in accidents
Some insurance industry insiders deny that zip codes specifically are what affect your premiums. However, they often do use location-based information even if they don't define their geographic areas by zip codes. This means that you could still see a change in your rates from moving to the apartment building next door or buying a new house in the next neighborhood over.
You can try to control your auto insurance rates by researching the above factors, but the only way to know for sure if what you pay will change is by requesting a new quote. And the difference in your premiums often will not outweigh the other costs and benefits of moving. In many cases, premiums only change by a few dollars.