Personal Insurance

Where You Live and Why It Affects Your Auto Insurance Rates

How location affects auto insurance rates

Most people understand the three major components of auto insurance: liability, collision and comprehensive coverage. Your liability coverage pays for bodily injury and property damage to others in an accident that you cause. Your collision coverage helps repair your vehicle after a crash, and comprehensive coverage does the same for damage not caused by hitting a vehicle or stationary object. Since it deals with “environmental” damage, collision coverage is the part of your insurance that is most heavily impacted by the place you live.

Accident Rates and Auto Insurance Rates

Different areas have varying rates of vehicle accidents. There are a lot of factors involved.

In some cases, the roads themselves can create accidents. Cities with narrow, overcrowded roads with lots of blind corners and poorly placed signals are more inherently dangerous than places with wide streets on a straight grid. The amount of rain and snow a place gets can affect accident rates. In addition, drivers in certain cities tend to be more aggressive than those in other places.

And those are just a few of the variables. Different liquor laws (including bar licensing) contribute to different patterns of drunk driving from city to city, county to county, and state to state. The number of teen drivers in an area can also have an impact on accident rates and auto insurance rates.

Insurance companies track the number of accidents in a particular area, down to the neighborhood/ZIP code level, and factor that into the rates they quote for your insurance.

U.S. Cities with the Safest Drivers
Rank City and State
1 Fort Collins, Colorado
2 Brownsville, Texas
3 Boise, Idaho
4 Kansas City, Missouri
5 Hunstville, Alabama
6 Montgomery, Alabama
7 Visalia, California
8 Laredo, Texas
9 Madison, Wisconsin
10 Olathe, Kansas
U.S. Cities with the Most Dangerous Drivers
Rank City and State
1 Worcester, Massachusetts
2 Boston, Massachusetts
3 Washington, D.C.
4 Springfield, Massachusetts
5 Providence, Rhode Island
6 Baltimore, Maryland
7 Glendale, California
8 Alexandria, Virginia
9 Philadelphia, Pennsylvania
10 New Haven, Connecticut

Patterns of Crime

In addition to accident rates, insurance companies pay close attention to reported crime statistics—especially those that point to higher-than-average insurance claims. Some of these include:

  • Auto thefts (stolen vehicles)
  • Auto burglaries (stuff stolen from vehicles)
  • Auto vandalism
  • Insurance fraud

If you happen to live in an area with low rates of property crime, you’ll probably enjoy the benefit of lower insurance rates. On the other hand, if vehicle-related crimes are higher than average in your neighborhood, you’ll likely pay more than residents in other parts of town.

Also, since the average ZIP code is about 90 square miles in area, it’s possible that your relatively safe neighborhood is lumped in with the statistics of an area with higher crime. And unfortunately, that means your insurance rate may be higher than it otherwise might be.

Most Expensive ZIP Codes for Auto Insurance
Rank City and State ZIP Code
1 Detroit, Michigan 48227
2 Brooklyn, New York 11226
3 Philadelphia, Pennsylvania 19132
4 Providence, Rhode Island 02903
5 New Orleans, Louisiana 70117
6 Los Angeles, California 90029
7 Woodbridge, Connecticut 06525
8 Baltimore, Maryland 21216
9 Miami, Florida 33142
10 Royalton, Kentucky 41464
Least Expensive ZIP Codes for Auto Insurance
Rank City and State ZIP Code
1 Green Springs, Ohio 44836
2 Arden, North Carolina 28704
3 Saco, Maine 04072
4 Christiansburg, Virginia 24073
5 Boise, Idaho 83706
6 Lake Havasu City, Arizona 86403
7 West Lafayette, Indiana 47907
8 Allouez, Wisconsin 54302
9 Concord, New Hampshire 03303
10 Normal, Illinois 61761

Natural Disasters

Mother Nature tends to rage more in some places than in others. It’s somewhat uncommon for Denver residents to deal with hurricanes and tsunamis, for example, and the city of Milwaukee haven’t felt an earthquake in … forever. Back in 1999 everyone was shocked when a tornado touched down in downtown Salt Lake City, overturning cars and ripping roofs off of houses. That kind of thing is not uncommon in Oklahoma, but it’s a once-in-a-lifetime occurrence in Utah.

This kind of obvious thinking doesn’t escape the notice of the insurance companies. Vehicles near the coast are at higher risk of being damaged by tidal waves, hurricanes and typhoons. Drivers who live near major fault lines have a much higher likelihood of having their cars destroyed by an earthquake. Cars in “Tornado Alley” states are at an elevated risk of being carried off like Dorothy’s house in The Wizard of Oz.

What this means is you’ll pay a little more for your comprehensive insurance in places like California, Florida and Oklahoma than you will in Missouri, North Dakota or Michigan. Where the risk of a natural disaster is higher, the premiums are a bit higher.

What Can You Do?

Nobody is suggesting that you should move to a new ZIP code to get a break on your auto insurance rates. If you’re considering a move, however, it doesn’t hurt to talk to your insurance agent (or even your real estate agent) before you buy. At the very least, you’ll know ahead of time what the crime and accident rates are for your new area—and whether you’ll pay more or less for your auto insurance.

Also, if you’re considering a move, relocating closer to your place of business can cut down on the length of your daily commute. Not only does this improve your quality of life, it will also lower the cost of your insurance.

Leavitt Group—national resources, local trust. Leavitt Group is the 12th largest independently held insurance brokerage in the United States. We pride ourselves on our experience and ability to help our clients succeed. Contact an agency near you