How Your Zip Code Affects Your Car Insurance Rate

New Years Resolution: Lower Your Car Insurance Payments

In the post-Christmas calm before the storm of the New Year, we are all searching for resolutions that seem serious enough to be important yet simple enough to actually be manageable. Let’s be honest, we are not going to change our lives overnight . . . But a simple change to our pocketbooks? A quick bit of research that could change our monthly payments? Well, that could provide the funding for the rock climbing you have been wanting to take up, or that weekly girls night out you have been hoping to join in with. Checking in on your car insurance rates by zip code will also give you the peace of mind needed to start out this year well. So go for it, take the famous “fifteen minutes” to check out car insurance rates by zip code. And if you’re not sure why, read on.

Why check on car insurance rates by zip code?

Studies show that your physical location, as indicated by your zip code, can influence your car insurance rates by up to 82% (http://www.cbsnews.com/news/car-insurance-are-you-in-a-high-cost-zip-code/). As you would expect, some places are simply more expensive to live. We know that’s true when it comes to housing costs and gas prices, but we more rarely remember that our address affects our monthly car insurance bill. By doing some quick searches to see what rates are available in your zip code, you can far more easily cost-compare between companies.

How does zip code affect my car insurance rates?

Your price for car insurance is based on a mathematical calculation that includes how likely your car is to be in an accident, and how costly it will be to repair it once it has been. As you can imagine, those factors are very related to where you live, and drive. Additionally, if others in your zip code are primarily driving expensive cars, this will also raise your monthly bill, as a collision with a Lexus is bound to cost more than a collision with a Honda Accord. Theft frequency in your neighborhood can also be a factor. Car insurers use the information they collect on how much their other customers in your zip code end up costing them, to set the rates for you. Of course, if possible, they’ll charge you a bit more than necessary to pad their bottom line.

Find Car Insurance by Zip Code Here

But doesn’t my zip code look the same to all the insurance companies?

Not at all. That’s what is most fascinating about this science. Or art? While all car insurance companies are using a similar method to evaluate your risk based on your zip code, not all insurance companies will charge you the same amount for that risk.  Each company has it’s own base rate applied to the zip code. While all recognize the same risk, not all charge us the same for it.

Even more importantly, where that base rate falls can cause any other risk factors you may have (such as a history of accidents) to be even more heavily
penalized by your insurance company. If you can switch to a company with a lower base rate, or different rules for calculating your risks, you can save a whole lot of
money. And if all this sounds complicated, well, that’s because it IS. But the easiest way to see how insurers compare on that base rate is by shopping using your zip code.

But what if I’ve already checked my car insurance rates by zip code a few years ago?

The next good news in this whole world of car insurance is that after you figure it all out, the rules can change again at any time. That means if it’s been more than a year since you signed on with an insurance company, things may have changed and your rates may be lower elsewhere. The “Nosy Neighbor” zipcode comparison tool, if used over time, highlights how much rates can change even within the course of a single year.

In addition to that, many people forget that car insurance is actually a negotiable bill. The company you have been paying to insure your car may no longer be offering you a competitive rate even compared to their new customers. It’s common for insurers to charge more to their long-term customers than they do for those who are newly applying for insurance through them.

Okay, okay, I’ll do it. But when should I check my car insurance rates by zip code?

As you can imagine the costs to insurers in each zip code fluctuate somewhat yearly. Just as people shop differently each Christmas because of such big-picture things as economics and the weather, they drive differently too. And that difference in driving, and the cars we buy, effects each of our rates. That’s why you should definitely take the time to recheck your insurance rates by zip code, annually. I like to do it right about now, just as I am wrapping up end of year things and thinking ahead to the new season. If I am able to save some money on car insurance, it’s a huge boost to all my plans for the year ahead.

So belated Merry Christmas! Happy New Year! And Happy saving-more-money on car insurance rates! I’m off to recheck mine, right now.