Want Cheaper Car Insurance? Move

It’s common knowledge that where you live affects your car insurance premiums. People in Manhattan will pay more for insurance, all things being equal, than in most rural towns in the mid-west, for example. But a new study by CarInsurance.com shows that even moving a few miles away from where you currently live can have a dramatic affect on your premiums.

Here are a few examples:

  • The least expensive city for car insurance is Bullhead City, Arizona, where a 40-year-old male with a clean driving record in a 2012 Honda Accord would pay $730 a year. But move a few miles to Laughlin, Nevada and premiums skyrocket 70 percent to $1,280 a year.
  • In New Orleans moving across town could save you $872, or 33 percent.
  • In Manhattan, car insurance premiums for the same driver in the same car could be as low as $1,772 or as much as $2,847.

If you are wondering why rates can vary so significantly in the same city, it comes down to two words–“territorial rating.” Insurance companies have tons of data on insurance claims by zip code. For a myriad of reasons, some zip codes have higher claim rates than others. If you happen to live in a zip code with a lot of claims, you’ll pay more for your car insurance.

What’s interesting, and a bit perplexing, is that some states limit the ability of insurance companies to use territorial ratings to set premiums. In California, for example, insurance companies must base rates on the insured’s driving record and miles before considering location. Even so, premiums are 150 percent higher in Los Angeles than 100 hundred miles north in Santa Barbara, according to the study.

And guess where the highest rates can be found. This one surprised me. The honor goes to Highland Park, Michigan, where the same Honda mentioned above will cost the owner $4,214 for car insurance. Gulp.

If you want to check out rates in your area, visit our auto insurance comparison tool.

Topics: Insurance

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