Professional Documents
Culture Documents
If you're wondering why your car insurance rates are through the roof, take a close look at your ZIP
code. This five-digit identifier has a dramatic impact on how much you pay, swinging the cost of
coverage by hundreds, sometimes even thousands, of dollars.
Indeed, just changing the location of your garage by a few miles makes a massive difference,
according to CarInsurance.com, which just completed a study of the impact of ZIP codes on rates.
Consider a Michigan driver who lives in the Detroit area. If he lives in the 48227 ZIP code, just
northwest of downtown Detroit, he'd be paying the highest insurance rates in the nation -- an
average of $5,109 a year. But if he moved about 10 miles down highway 96 into Livonia (ZIP 48154),
his average insurance cost would plunge to just $2,369, a savings of $2,740.
That's for the same coverage for the same driver and same car.
"The average driver is not aware how much location impacts how much they pay for car insurance
because there are many factors that go into setting your rate," said Michelle Megna, managing
editor of CarInsurance.com. "But a lot of car insurance companies use your ZIP code as a starting
point when setting rates, looking at how many claims they get from that ZIP for theft, vandalism,
accidents -- and the cost of those claims."
The bottom line: Moving a few miles, often even in the same city, can save or cost you a bundle.
CarInsurance.com looked at 33,410 ZIP codes in the U.S. and calculated rates by surveying the
nation's six-largest auto insurers -- Allstate, Farmers, GEICO, Nationwide, Progressive and State
Farm -- based on coverage for a single 40-year-old male who commutes 12 miles to work each day,
and drives a Honda Accord.
Policy limits were assumed to be 100/300/50 ($100,000 for injury liability for one person, $300,000
for all injuries and $50,000 for property damage in an accident), with $500 deductibles for both
collision and comprehensive coverage. This hypothetical driver has a clean record and good credit.
Naturally, individual rates will vary based on the driver, car and coverage. But by holding all those
factors constant, CarInsurance.com was able to sr22coverage.com isolate the impact of ZIP codes on
average costs, said Megna. The site also put up a cost-comparison tool, allowing consumers to
compare rates in their own ZIP code to the averages in nearby areas.
Michigan, which has a no-fault insurance system, is one of the most costly states to insure a car
overall. The national average for insuring this hypothetical driver was $1,231, Megna said. But the
cheapest rate in Michigan ran $1,628.
What are the most and least costly ZIP codes?
Most costly:
1. Detroit, Michigan, in ZIP code 48227: $5,109
130 percent over statewide average of $2,226