How Your Zip Code Affects Car Insurance Rates | Freeway Insurance


Does where you live have an impact on how much you pay for car insurance? Surprisingly, it does indeed make a difference where you live when your insurer is determining what you’ll be quoted for your auto insurance coverage. In general, if you live in a big city or busy suburb, you’ll pay more than if you live in a smaller community or rural environment. 

Fair? You probably don’t think so if you’re an urban dweller. Nevertheless, it’s something you might have to deal with. Just remember that this financial reality can be offset by taking advantage of multiple other ways of reducing the car insurance rates you’re charged. 

Now let’s take a closer look at the “why” of this insurance cost estimation phenomenon. 

Why Will I Pay More for My Car Insurance If I Live in an Urban Environment? 

Simply put, the more traffic the more chance of an auto accident and a resulting claim. Crime, such as vehicle theft and vandalism, also tends to be higher in more urban areas. 

There are several factors that come together to make premiums more expensive for big-city and suburban drivers. But first, let’s take a quick look at why any factors make one car insurance applicant pay more than another. 

Rates are set after underwriters calculate the odds that any customer will cost them more than they receive in premiums. If those calculations point to the possibility that the insurance company could lose money on the customer, they’ll either reject the applicant or set the rates high enough to boost the odds of turning a profit despite the heightened risk. 

That’s why individuals with a lot of speeding tickets or car accidents are often turned down for coverage or charged more as they are considered high-risk drivers

Now, here are some of the key reasons urban drivers typically pay more. 

  • More Traffic Means More Collisions 

It’s math, really. More cars on the road mean more opportunities for your car to hit – or be hit – by another. Even fender benders at congested highway speeds are costly. If you live in a serene small town or in a rural setting where you don’t often see even your neighbors, there’s less chance you’ll crunch metal with anyone. Living in a city however, can raise your car insurance rates. 

  • Car Theft and Vandalism Are More Common in Higher-Crime Areas 

That sleepy little town in which you live might be a little boring, but there might also be less crime, including auto theft and vandalism. Insurance underwriters look at crime rates within various zip codes when calculating what you’ll pay for coverage. 

  • Other Geographic Factors Can Be Your Friend or Enemy in Car Insurance Rate-Setting 

Insurance company underwriters definitely do their homework when it comes to evaluating zip codes for coverage rates. They’ll even look at such factors as the relative cost of healthcare in an area and the cost of car repairs. After all, you’re likely to get your damaged car fixed or seek after-accident medical care as close to home as possible. 

  • Local Weather Conditions Can Affect Car Insurance Rates Too 

Here’s a zip code factor that doesn’t necessarily lend itself to the big city vs. small town calculation. If you live in a location where tornadoes, hurricanes, flooding, or other harsh weather factors are common, you might very well pay more for coverage regardless of the population density of your home address. 

cars driving in middle of city

What Other Factors Determine What I’ll Pay for Auto Insurance? 

Your age, driving record, and the insurance regulations in the state in which you live are among the chief determining factors that will set your premiums. But that’s only for starters. Here’s more information on those and other factors in car insurance calculation

Another way to find cheap car insurance is to reach out to an independent insurance agent. Brokers who only work for one insurance company can only offer policies from that single source. On the other hand, independent agents have contractual relationships with multiple carriers. That means they can go shopping for the most competitive rates and find the coverage that works best for your budget and your family’s needs. 

Get Affordable Auto Insurance Online Today 

We can help you find cheap car insurance regardless of where you live. Call your independent Freeway Insurance agent at (800) 777-5620 or get a quick car insurance quote online. You can also find an office location near you and talk directly with a Freeway Insurance agent. 


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