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How Car Insurance Rates Vary By Zip Code

  • admin
  • December 2, 2014 7:33 PM


Car insurance rates can vary drastically by location, and there are many different factors that impact them beyond just the driver’s history and credit. When considering car insurance rates, it’s more common to think that the driver is the most important detail in determining policy premiums, but the zip code where the car is insured has just as much impact.

What About The Zip Code Can Affect The Rates?
No matter what kind of car you drive, there are variables related to your location that the car company will take into account. If you live in a high crime city, that can drive rates up. If there is a risk of weather-related accidents, your car insurance may spike. If the economy in the area you’re live in is in bad shape and there are a high rate of defaults on insurance premiums, that can also affect your policy prices.

Who Is Hit The Hardest?
Detroit, Michigan has experienced a city-wide series of misfortunes that is taking a long time to rebound from. When the automotive industry in the city turned south and American cars were no longer selling well, Detroit took a hit that put many people out of work and took a substantial amount out of the local coffers. As the city still tries to recover from bankruptcy, real estate prices remain low, and employment is not as bountiful as citizens would like. Unfortunately, many neighborhoods also have high crime rates, and car theft has skyrocketed. All of these factors combine to impact insurance rates negatively, and Detroit holds the title for the highest car insurance premiums in the country.

Saying that the rates in Detroit are high is probably an understatement. In fact, they’re more like exorbitant. Drivers in Detroit are, on average, paying more than $10,000 per year for car insurance based on a recent analysis. So why have the rates gone so sky high? It’s more than a little bit of a vicious cycle. Part of the reason is that so many drivers don’t have insurance. This makes uninsured motorist coverage more expensive. The people who do pay their insurance premiums are covering all of those who don’t. It begs the question: Would more people have insurance if the rates weren’t so high? And would uninsured motorist coverage go down in price as a result?

Beyond the uninsured motorist coverage, the laws in Detroit have created a situation that makes it more difficult to combat insurance fraud. That has also had a lot to do with the increasing premiums because it has gotten much more expensive to insure people thanks to claims that might not be valid.

Who Has It Easiest?
If you’re considering car insurance rates as part of your decision for where to move next, several cities throughout North Carolina have rates just around $1,000 per year. That’s significantly below the national average, and 1/10th of what it will cost you to drive in Detroit. North Carolina laws are geared toward minimizing insurance fraud, and they have helped to keep rates incredibly low. More than that, there are far fewer uninsured motorists in North Carolina than the national average, so drivers are less likely to be paying for the coverage of people who are cruising around without insurance.

What Are Your Rates?
Rates differ drastically in zip codes throughout the country, and even a stellar driving record can’t help that much in certain areas. The geographic region has a lot to do with the insurance companies view of the risk of insuring you, and your good driving record will either keep the rates lower or ensure that they don’t hit the upper limit, but it may not be able to make them as low as other parts of the country. Keep your driving record clear and your credit good, and you’ll still be in much better shape for getting affordable coverage if its available– no matter where you live.

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