Why Where You Live Can Impact Your Car Insurance Rates


The price you pay for auto insurance premiums depends on many factors. Some of them you can control, like your driving record, the type of car you drive, your credit score and annual mileage. Others are more
problematic. Where you live, for instance, can play a big role in what you pay, but few people are in a position to pick up, pack up and move to a new location just to save money on your car insurance premiums. For what it’s worth, here’s why where you live can affect your car insurance.

Some of the data an insurance company will consider in terms of geographic location are the number of uninsured drivers in a particular area, crime rates and weather conditions. Every insurer has to send
your state insurance commissioner a request for the base premium for your particular state or area to ensure that they are assessing a premium that is high enough to cover losses. It’s largely based on their knowledge of accidents, car thefts, property stolen from vehicles, vandalism and fraudulent claims in that state or community.

That said, here are the geographic factors insurance companies can legally employ to determine premium rates:

  • If your state has a higher than average number of uninsured drivers, that’s going to mean higher premiums because drivers with insurance have to foot the bill for all damages
  • If you live in an area with high vehicle crime rates, especially vandalism and theft, your insurer can reasonably assume your car is statistically more likely to be a target for such crimes.
  • If you live in a state or municipality with a history of handing out big monetary awards for auto accidents involving personal injuries, you can expect that to drive up car insurance premiums for
  • If you live in an area that routinely experience severe weather like tornados or floods that cause significant claim activity, you’re likely to see higher car insurance premiums.

What insurance companies cannot do is deny you insurance or jack up your rates by redlining. The term originated in the early part of the last century and referred to a literal red line financial institutions
would draw around a neighborhood that had high concentrations of people who were deemed a poor risk for loans. The practice eventually became associated with any attempt to deny services based solely on geographic location. Redlining is illegal in every state and no reputable insurance company engages
in the practice. If you suspect that you’ve been a victim of redlining, you can take it up with your state insurance commissioner.

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