You might be surprised to learn moving to a new address can change the price of your car insurance. Let’s say you exchange an urban address for one in the suburbs. In most cases you’ll see your insurance rates decrease — assuming that suburb has a reputation for being quiet and trouble free. On the other hand, let’s say you move from a city in Montana to one in Michigan. You’ll also see your rate increase.
Why does your address affect your car insurance cost?
In a word — risk.
Traffic and Accident Rates
One of the reasons that bucolic suburb, or a fairly quiet state like Montana, will cost less than one like Michigan is there are fewer instances of traffic violations and accidents. Insurance companies abhor risk. To mitigate it, they charge more for situations in which there might be elevated peril.Moving to a bigger and busier place introduces more jeopardy, as well as a concomitant increase in premiums.
Potential for Crime
Remarkably, rates can also vary from ZIP code to ZIP code within a given city. The leading element in that instance is the prevalence of crime in the area in which you reside.
And yes, we also know this usually goes hand in hand with the income level of an area. Once again, those who can afford to pay the most are called upon to pay the least.
High-income areas tend to have less crime, largely because everyone in the neighborhood has something to lose. As a result, they tend to be more vigilant and more careful.
Distance to and from Work
One of the first questions insurers ask is the length of your daily commute. Statistics show the farther away from home you must drive to get to work, the more likely you are to be involved in an accident at some point. Your exposure is greater when you spend more time on the road.
If you have a garage in which you can park your car each night — one that is also locked and accessible only to you and your family members — your car insurance rate will be lower than that of someone who lacks that advantage.
Cars are more likely to be stolen when they’re in carports or parked on the street afterdark. This represents elevated risk — and we’ve already discussed how insurers feel about risk.
Some states have more stringent car insurance requirements than others, just as you’ll typically have to carry more insurance when leasing vs. buying a car.
Getting back to Michigan for a moment, the state requires all drivers maintain Personal Injury Protection coverage. This way, people with injuries can be compensated regardless of who is determined to be at fault in an accident.
One of the smartest things you can do when shopping for anew home is get an idea of the car insurance rates for the neighborhood. Savings you might have achieved by moving to one with lower housing costs might be offset by your need for additional insurance. This is particularly true when you consider homeowners and renters insurance also take location into consideration when setting rates.
Another smart play is to find and take advantage of every possible discount your insurer will provide. These efforts will pay off when you understand why your address affects your car insurance cost. One more thing:Having your insurance bill mailed to an address in a lower risk neighborhood,in which you do not reside,could get a claim denied — as well as see you charged with insurance fraud.
It isn’t worth it.