It’s common knowledge that the type of car you drive, your driving record, age and sex affect the price you pay for car insurance. Most people, however, don’t realize their zip code can have a huge impact on your rates. In fact, someone with an identical profile just a few miles away could be paying up to 70% less. Here are six reasons why:
If you live somewhere that gets a lot of snow and ice, there is more likely to be a bigger occurrence of accidents. For that reason, you are going to pay more for insurance. Similarly, areas that frequently experience weather emergencies like tornadoes, hurricanes, and earthquakes will have higher risk of vehicle damage. Mild weather means fewer payouts, translating to lower rates.
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How quickly can the fire department or police reach you in case of an accident? Is your town good at clearing the roads after a snow storm? All of these factors can impact your car insurance rates. Insurance companies will also evaluate how safe the roads and intersections are in your town and charge you accordingly.
Traditionally, areas with more people have more cars. With more cars, come more opportunities for mishaps to occur – whether they be accidents, vandalism, injuries, or other potential expenses. A rural area will get you cheaper rates because fewer risk factors exist.
Believe it or not, the number of practicing lawyers in your zip code can also affect your insurance rates. No surprise, but like most of America, insurance companies do not like lawyers. When a lawyer gets involved in a claim, it is more likely to end in a higher payout, the exact opposite goal of the insurance company. When an above-average quantity of lawyers practice in your area, there is a greater than average chance you will hire one if you get in an accident or to dispute the resolution of a claim.
Insurance companies will also look at the crime rates in your area, if you’re not aware of how safe your neighborhood is, do some research online or contact your local law enforcement office. If your zip code has a high occurrence of car robberies and vandalism, you live in a high-risk area. Insurance companies, as always, follow the rule that the higher the risk the higher the rate.
Every state has different laws when it comes to car insurance rates. Some states limit the amount of clout that your zip code is allowed to have when determining your rates. They require your premium to be based mainly on your personal statistics and driving history. Additionally, each state has a different amount of minimum coverage required. If your state requires less coverage then your premium will be lower.
So while the type of car you drive is important, your zip code is equally important. You can use this knowledge to help you decide where to live.