Role of geographical location in increased auto insurance rates


Automobile owners can never plan their monthly budget without taking the insurance premiums into consideration, since it makes a substantial part of every month’s expenses. There are many factors that affect in premium rates for every individual. No two individuals can get the same quote when it comes to insurance premiums, since every policy is made specifically for the applicant’s unique requirements. There are factors like driving records, car model, car make and so on that can change over a period of time altering the premium rates. But in most cases, there is one factor that remains constant at all times in most cases, and that is the geographical location of the policy holder.

Insurance companies that belong to different geographical locations have different insurance quote for the same model of the car, the same driving record, and all the other same details. The reason for this diversity is the fact that the driving conditions of two geographical locations are never same. Driving conditions favorable or unfavorable determines the insurance rates to a large extent. This is because insurance companies will have to shell out more money in unfavorable driving conditions more than favorable and safe driving conditions. Some of the important reasons for geographical location to determine the insurance premium rates are given below:

  • Driving terrains: Driving in mountainous regions is far more risky than driving in plain roads without tricky turns and curves. Insurance companies consider hilly regions risky and have higher premium rates to counteract the risk. Also, driving in country roads are far less risky since there is no high traffic zones, and highway threats like in the case of busy city roads. So naturally, insurance companies charge a higher premium rate for city residents than drivers residing in suburbs and countryside.
  • Weather is an important issue deciding the premium rates, and so geographical areas susceptible to rough weather are costlier when it comes to insurance premium rates. Extreme cold conditions, slippery roads, bad rains, and hailstones make driving difficult. Not just driving, but extreme weather conditions like hurricanes, tornadoes, earthquakes and floods can cause damages to cars and insurance companies will have to pay for damages if the policy holder has comprehensive coverage.  Geographical locations that are prone to any of the above natural disasters are costly when it comes to auto insurance, and having comprehensive coverage, though costly becomes necessary.
  • Some geographical areas are prone to criminal activities and vandalisms. Since comprehensive coverage pays for damages due to vandalism, fire and other such things, insurance in such areas are costly. Usually cities that have increasing number of car thefts, and vandalism incidences have high premium rates for comprehensive coverage than the rest of the locations, since the chances of people claiming through comprehensive coverage is fairly high.

Although geographical location is one factor that cannot be changed easily, there are other effective ways to decrease the premium rates, and buy the necessary insurance policy. Having a clean record, taking defensive driving lessons, having updated car model can all add to discounts, and help in managing the premium rates more effectively.