ZIP codes can cause a steep rise in your auto insurance rates


Most people don’t realize that just residing in a particular ZIP code can cause a steep rise in auto insurance rates. Even if you have moved from a particular ZIP code to another within the same city, you may see a rise in your auto insurance rates. This can happen despite having the same driving record, vehicle, and claims history.

As per a study, around half a dozen ZIP codes were found to have different auto insurance rates in Tampa, Florida. There was a difference of over $400 per year for a 40-year-old male, living in a posh suburban neighborhood, when compared to the same person living in a modest neighborhood just a few miles away. Therise in insurance rates is also not related toproperty values.

There are a number of factors that may influence the auto insurance rates, states Chris Hackett, Director of personal lines, Property Casualty Insurers Association of America. While some of them can be changed, there are those that are beyond anyone’s control. Some of the variables that may impact the rates include the model and make of your vehicle, driving record, credit scores, part of the day the car is driven, performance of the car in case of collisions, etc. However, even if all those factors remain steady, the area you live in will certainly have a profound impact on the auto insurance rates. Hackett also adds that the insurers will generally look at the claims history in a certain ZIP code before setting the premium rates.

Some of the factors that may drive up the auto insurance rates include the number of vehicles stolen, claims made for stolen property from the car, fraudulent claims, and number of reports on incidents of vandalism. Even if there are instances where the damage may have been caused by a tornado resulting in insurance claims – can result in higher rates.

Frank Scafidi who is the spokesman for NICB experienced this phenomenon some years ago, when the ZIP code (where he lived) had been changed by the US Postal Service. However, he was lucky as his auto insurance rates saw a decline.

Finally, everything boils down to the experience the insurance company has had with the losses in the neighborhood. Motorists, who live in areas where there is an overall increase in crime rates, can end up paying lower rates if more and more people use public transportation instead of their own vehicles, states Scafidi.