Quoting Auto Insurance Rates by Zip Code Adobe Stock

Quoting Auto Insurance Rates by Zip Code

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Have you ever wondered why auto insurance companies ask for a zip code in order to provide you with a quote? Have you asked yourself why these five digits are so important to your insurance rates? Would you like to gain a deeper understanding of insurance rates and zip codes so that you can reduce your monthly costs?

If you answered any of these questions in the affirmative, then you are in the right place. Above, we discuss the ins and outs of quoting auto insurance rates by zip code. After reading this article, you will have everything you need to save money while navigating the complex auto insurance market.

Our experts have reviewed every major insurance provider to identify the best car insurance in the industry. If you would like to learn more, enter your zip code to obtain free insurance quotes from providers in your area.

What Factors Go into Quoting Auto Insurance Rates by Zip Code?

Auto insurance companies base their quotes on risk assessment. They are essentially examining the odds that you will need to make a claim in order to determine your rates. If there is a high likelihood that your vehicle will suffer damage at some point, then your rates will be higher. The total value of your vehicle will also influence rates, as more expensive vehicles have higher repair costs.

Listed below are the other factors that influence quoting auto insurance rates by zip code:

  • Crime rates
  • Population density
  • Road conditions
  • Accident statistics
  • Significant weather events

If you live in a high crime area that frequently experiences waves of vehicle burglaries or thefts, then your rates will rise. Population density is also an important factor to insurance companies, as more crowded areas generally have more vehicular traffic. As they conclude that the more drivers there are on the road, the higher the chances of a crash are, this factor also raises your rate.

Road conditions will influence your rates too, but not as drastically. Roads that are in a constant state of disrepair magnify the dangers of inclement weather and can result in damage to your vehicle.

What Zip Codes Have the Highest and Lowest Auto Insurance Rates?

As you might expect, premiums fluctuate throughout the country. These fluctuations are caused by the factors discussed above. Population density, frequency of severe weather events, crime rates and crash statistics are the primary driving factors behind these variations.

However, it is still possible to get a good baseline idea of what your insurance rates will be by looking at statewide averages. The National Association of Insurance Commissioners (NAIC) collects comprehensive data on auto insurance rates. Its data includes the 10 most expensive and least expensive states to obtain auto insurance coverage. In 2018, the 10 most expensive states were:

  1. Louisiana
  2. Michigan
  3. Washington D.C.
  4. Florida
  5. New York
  6. New Jersey
  7. Rhode Island
  8. Delaware
  9. Nevada
  10. Connecticut

The 10 least expensive states were:

  1. North Dakota
  2. Maine
  3. Iowa
  4. South Dakota
  5. Idaho
  6. North Carolina
  7. Wisconsin
  8. Wyoming
  9. Indiana
  10. Vermont

The average auto insurance expenditure in Louisiana was $3,429, and the average in North Dakota was $1,326. While the average expenditure in Louisiana was more than double that in North Dakota, zip code still plays a factor in insurance rates.

For example, those who live in an extremely rural part of Louisiana can obtain much lower rates than those that live in downtown New Orleans. As noted above, these rates will be influenced by crime rates, population density and traffic crash statistics.

Can Quoting Auto Insurance Rates by Zip Code Lower Your Premium?

While it may seem like you do not have much control over your zip code and insurance rates, planning ahead can help you keep your rates down. For instance, if you rent in a major metropolitan area, you should compare rates in various zip codes. A move to another zip code within the same city could save you hundreds every year.

If you own your home, moving zip codes may not be an option. Fortunately, there are several ways that you could still save money on your auto coverage. We will discuss that in further detail a bit later.

Can I Lie About My Zip Code?

With hundreds of dollars on the line, it may be tempting to lie about your zip code. I mean, it’s just an address, right?

Wrong. Lying on your zip code is actually a serious offense that falls under the larger umbrella of insurance fraud. If you file a claim or get caught lying on insurance documents, you can face serious consequences like jail time or thousands in fines. The potential savings is simply not worth the risk of possible repercussions.

Is it Legal for Insurance Companies to Assign Rates Based on Zip Code?

Currently, quoting auto insurance rates by zip code is legal in most states. However, several groups are fighting this common practice because they consider it to be discriminatory. The primary argument is that this practice compounds hardships on low-income neighborhoods.

In fact, a few states have already outlawed the practice. Michigan has completely banned auto insurance companies from using zip codes to set auto insurance rates, deeming it a “non-driving” factor. Home ownership, credit score, education level, occupation and marital status are also prohibited, non-driving factors in Michigan.

California is the second state to ban the use of zip codes for rate setting. However, it does provide an exemption: If you voluntarily allow the insurance company to consider your zip code, you may be eligible for a discounted rate. It is important to note that the company must expressly obtain your permission to do so beforehand.

Tips to Lower Your Auto Insurance Rates if You Live in an Expensive Zip Code

There are several proven ways to obtain lower auto insurance rates. One of the most effective is to simply shop around. Even if a rate sounds great, you should always compare it with other offers. Our tool above makes comparing rates easy.

If you do not drive very often, consider enrolling in a usage-based insurance program. These programs are based on your weekly/monthly/yearly mileage and are extremely affordable. They operate on a simple premise: If you drive less, you pose a reduced risk of being involved in a vehicle crash.

You can also work to improve your credit score. Credit score-based rates are usually divided into tiers. Once you have reached a certain threshold, contact your company and see if they will retroactively apply a discount.

The last tip for reducing your rates is to bundle. If you own a home, RV, boat or other property that requires insurance, combine packages. Many insurance companies offer significant discounts when you insure multiple assets with them. 

Find the Lowest Rates in Your Zip Code: Our Recommendations

Our experts have reviewed the top providers throughout the nation. During our research, we identified several insurance companies that set themselves apart in terms of coverage and value. Below, we have included our take on two great auto insurance options: GEICO and Progressive.

If you would like to get free quotes from these companies and other providers, use our simple quote tool.

Compare Car Insurance Rates

Enter your zip code to shop for the best rates in your area:

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GEICO: Most Discount Options

We rate GEICO as the best overall auto insurance provider, with a score of 4.9 out of 5.0 for industry standing, an 4.2 for coverage, a 4.0 for affordability, and a 4.3 for customer experience. The company topped our rankings in every category, and we aren’t the only ones to rate GEICO highly. The insurer earned an A++ rating for financial strength from AM Best.

GEICO has tons of discounts available on full coverage auto insurance and other insurance policies. It offers mechanical breakdown insurance too, which is a good alternative to an extended warranty. 

Progressive: Best for High-Risk Drivers

While GEICO is our best all-around option, Progressive is the ideal choice for accident-prone drivers. If you have a less-than-perfect driving record, then you should strongly consider this insurance provider.

We give Progressive an overall rating of 4.5 out of 5.0. It earned a 4.8 for industry standing, 4.8 for coverage, 3.9 for affordability, and 4.1 for customer experience. Progressive’s rates are a bit higher on average than GEICO because the company is willing to work with accident-prone drivers.

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