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Does Your Address Affect Your Car Insurance?

Your zip code affects the cost of your annual car insurance rate. True story.

Yes, the location of your primary residence affects your annual auto insurance premium—that is, the total dollar amount, or rate, you pay to have car insurance for a 12-month period. If you move to a new state, your new insurance rate may be very different than your old one. If you're paying more than you like, compare rates and get a free and affordable car insurance quote in your area. You could save up to 40% in premiums.

Your Address Is Not the Only Factor That Impacts Your Car Insurance Rate

When an insurance company assesses your overall risk profile, it considers not only your address—that is, your area, your zip code, your geographical location—but also your age, gender, marital status, driving record, credit rating, insurance history, your vehicle's make and model, the amount you drive and the driving history of any other licensed drivers in your household, among other factors.

So, your address is only part of the equation, and that equation is just a part of a bigger equation.

How Do Auto Insurance Companies Calculate Auto Insurance Rates Based on My Address?

Your address is just one factor in your overall risk profile, and your overall risk profile determines your final insurance score. Your address indicates how much of a risk you are in terms of car theft and vandalism as well as factors affecting the area you live in.

Faced with a mountain of raw data, every insurance company comes up with its own statistics. In fact, all insurance providers calculate an insurance score based on how they rate certain risk factors, so no two insurance providers will weigh any one of those individual risk factors in just the same way.

In the end, your annual auto insurance rate is calculated according to three major factors: your insurance score, your insurance company's financial bottom line and the general strength of the U.S. economy. Your address affects your insurance score.

An Inspirational Moment for the Overwhelmed Who Seek Cheap Car Insurance Rates

If you have the power to move to a safer zip code, move your car into a garage or, say, raise your credit score, you have the power to raise your overall insurance score. If you have the power to improve your insurance score, you have the power to lower the cost of your auto coverage. When it comes to getting the car insurance that's best for you, your family and your wallet, you can compare rates to see which insurer will offer you the best rates.

If you have a bad credit score, lapses in your insurance coverage, moving violations or a multi-claim record, there's even more reason to comparison-shop. It's the single best way to snag the lowest-cost car insurance rates.

There are as many car insurance quotes as there are insurance companies, so be a savvy shopper and do some research, compare all the companies and policies, and then compare the coverage prices. Comparison-shop when you move or you're moving! Comparison-shop for new products and services! Comparison-shop when your credit score goes up! Shop with SmartFinancial because the service is free.

Do You Rent or Own Your Home Address?

An insurance customer who owns their own home will pay less for their auto insurance than a policyholder who rents an apartment. Why? The insurance industry associates a homeowner with a greater degree of financial stability and caution. Here is a price comparison in a few states to prove the point:

State Renter Homeowner % Difference $ Difference
Alaska$1,198$1,1514.10%$47
Arizona$1,295$1,2473.80%$48
Connecticut$1,550$1,4745.20%$76
New York$1,688$1,6025.40%$86
New Jersey$1,671$1,5110.60%$160

So, a New York resident who rents an apartment will be paying, on average, $86 more for their yearly auto insurance premium than a New Yorker who owns their dwelling. This is one way your address matters.

Homeowners pay less than renters, on average, for auto insurance.

But this factor is ultimately relative. For instance, an Empire State resident who is renting an apartment in rural upstate New York will no doubt be paying less, on average, for their auto insurance than a driver who owns a brownstone in downtown Brooklyn.

An Insider Tip for Homeowners

Did you know that you can get a big discount on your auto insurance if you own a home? This car-and-home discount can save you up to 15% or more! To take advantage of this savings, all you have to do is insure your vehicle and your house with the same insurance carrier. In the insurance industry, this bundling of policies is called a multi-policy discount, and every insurance company offers them.

To prove that you own your home, you will probably need to show your insurance agent one or more of the following documents:

  • A copy of your homeowner's insurance policy
  • A tax statement for your home
  • A mortgage payment stub

Of course, you can also get a multi-policy discount if you insure your vehicle and your condo with the same insurer. Further, you can get a bundling discount if you insure two or more cars with the same carrier.

A new address might change your premiums. Check your Rates before switching to a new policy.

Is Your Address in a High-Cost Insurance State?

Some states have a higher average auto insurance rate than others. Indeed, each state has its own set of numbers, statistics and averages on all kinds of things: insured vs. uninsured drivers, licensed vs. unlicensed drivers, the year-to-year number of fatal drunk-driving accidents, insurance claims per capita and so on down the rabbit hole. These factors affect your state's car insurance rates.

According to SmartFinancial, the top-10 cheapest states for auto insurance rates, on average, are as follows:

Rank State Monthly Avg. Rate Annual Avg. Rate
1North Carolina$69.16$829.92
2Maine$69.83$837.96
3Idaho$72.46$869.52
4Tennessee$77.35$928.20
5Vermont$84.48$1,013.76
6Iowa$84.66$1,015.92
7Indiana$87.01$1,044.12
8Ohio$87.12$1,045.44
9Wisconsin$88.73$1,064.76
10Nebraska$92.00$1,104.00

Would it surprise you to learn that these 10 states have, on average, fewer drivers and accidents and less crime than the states with the top-10 highest auto insurance rates?

If you are paying a higher-than-average auto insurance rate, that may be because your address is in a zip code that has a lot of crime, accidents, auto insurance claims, natural disasters or insurance fraud, among other local factors.

According to SmartFinancial, the top-10 highest car-insurance premiums can be found in Georgia, Rhode Island, California, Maryland, the District of Columbia, New Jersey, Louisiana, New York and Florida.

Is Your Address Vulnerable to Natural Disasters?

Earthquakes, hurricanes, tornadoes, floods, hail storms and wild fires can cause catastrophic damage, the costs of which are eventually absorbed by every insurance customer and taxpayer. If the wrath of Mother Nature visits your zip code on a regular basis, your auto insurance rate will reflect this greater risk of damage to your car. According to WorldAtlas, the top 10 states most in danger of bearing the brunt of a catastrophic natural event are as follows:

Rank State Major Disasters Since 1953
1Texas86
2California78
3Oklahoma73
4New York67
5Florida65
6Louisiana60
7Alabama57
8Kentucky56
9Arkansas54
10Missouri53

So, if your address is on the Gulf Coast, it will affect your car insurance rate. When you get insurance quotes, you'll get quotes that will have already contemplated—based purely on your zip code—the likelihood of your beloved ride getting bedraggled or busted by the next nasty Gulf Coast weather event. But the more your prospective insurers know about you and your particular situation, the more they can help you find ways to save money on your policy.

A High-Crime Address vs. a Low-Crime Address

There are many reasons why your address will affect your car insurance. For one, you're paying less if you live in the suburbs and not in the big city, which only makes sense, right? The suburbs are less populated and usually not associated with a high crime rate. Your premiums will be much lower in a low-crime area because the risk of theft and vandalism is greatly reduced.

Even if you don't live in a big city, you'll likely be paying more for car insurance if your address is in an area that has high crime. If break-ins and thefts run rampant in your neighborhood, you're likely to file a claim, which is why you're charged a higher premium in advance.

A Classic Example of Auto-Related Crime by Area

Let's take a moment to focus on your address and one specific area of auto-related crime: the theft of the almighty catalytic converter. Thieves love the catalytic converter for the precious metals it contains: platinum, palladium, rhodium and gold. In fact, as the price of those metals goes up, the theft of catalytic converters goes up.

A catalytic converter can cost $1,000 to replace! According to the National Insurance Crime Bureau, the top-five worst 2018-2020 states for catalytic-converter robber are, from highest number of thefts to lowest: California, Texas, Minnesota, North Carolina and Illinois. So, if your address is in one of those states, your auto insurance rate will take into account the high statistical possibility of your vehicle's catalytic converter getting swiped by a total stranger.

Auto Theft in Your Zip Code

If the home address is in an area that has a higher rate of auto theft than other areas, your insurance rate will definitely indicate that reality, whether or not you own your home. According to National Insurance Crime Bureau, here are the top-three U.S. cities for car theft in 2016 vs. 2015:  

Ranking

City

2016 No. of Thefts

2015 No. of Thefts

1

Albuquerque, N.M.

10,011

6,657

2

Pueblo, Colo.

1,325

983

3

Bakersfield, Calif.

7,176

6,000

Naturally, all Albuquerque, Pueblo and Bakersfield drivers are going to end up paying for their own town's exorbitant auto-theft rate.

Remember, your state's mandated minimum liability insurance does not cover the theft of your car. In fact, car theft is covered under comprehensive insurance, which covers the theft not only of your vehicle but also any of its parts.

How To Lower Your Premium If Your Address Is in a High-Crime Area

If you live in a high-crime area, your new car's anti-theft devices will lower your insurance premium.

Most insurance companies will lower your rate if your vehicle has anti-theft devices, so you should definitely look for a car that comes equipped with the latest and greatest crime-stopping technology:

Warning Devices

  • Audible alarms
  • Steering-column collars
  • Steering-wheel lock
  • Brake-pedal lock
  • Brake locks
  • Wheel locks
  • Decals that deter theft
  • Identification markers in or on vehicle
  • An etching of your vehicle identification number (VIN)
  • A micro-dot marking

Immobilization Devices

  • Smart keys
  • Fuse cut-offs
  • Kill switches
  • Starter, ignition, and fuel pump disablers
  • Wireless ignition authentication

Tracking Devices

  • GPS tracking
  • Telematics tracking

Of course, you should always remove your keys from the ignition, lock your doors, close your windows and park in a well-lit area. Even if you own a car that no one wants to steal, taking these steps will reduce the chances that you file an auto insurance claim—and that's the whole point: The more claims, the higher your insurance rate.

A new address might change your premiums. Check your Rates before switching to a new policy.

A City Address vs. a Suburban or Rural Address

City dwellers pay more for auto coverage than suburbanites and country folk. As opposed to the city, the suburbs and rural have sparser populations, fewer drivers, fewer accidents, and lower rates of theft and vandalism, among other statistical markers.

Let Your Insurance Company Know When You Move

If you've move or you're moving to a new address, you're obligated to let the DMV know. But did you know that you're supposed to tell your insurance company about any change of address? What effect your new address will have on your insurance coverage depends upon your new address and the carrier that issued your car insurance policy. Moving might be the best thing that ever happened to your policy rate!

If you change your address, you must inform the DMV and your auto insurer.

Of course, as mentioned above, if you purchase a new home, you should ask your insurance company about a car-and-home multi-policy discount.

Don't Park on the Street—Garage Your Ride!

Drivers who park on the street can expect to pay more for their auto coverage than drivers who park in a garage. Indeed, homeowners pay the least of all because they always get a discount just for having a garage in their home—in fact, an auto coverage provider will give them a discount even if that provider does not insure the home.

Parking your car in a garage could save you 5% on your car insurance.

If you don't own a home, look to move into an apartment that has a garaging option, whether that's in a gated area or an underground garage. If you move into an apartment complex that does not have a garaging option, look into renting a parking spot in a neighborhood garage. By some estimates, a driver can expect to save 5% on their auto coverage if they garage their ride.

Your Job's Address Matters, Too

The longer your commute, the more you pay in car insurance every year. In fact, if you drive more than 15 minutes to get to the office, you are looking at a significant increase. After all, the longer you are on the road, the greater your vulnerability to getting into an accident.

So, if your commute time changes or your route changes, you should contact your insurer. Not only that, if your new commute is the result of a job promotion and a new job title, you should also tell your insurer that bit of news—there might be a discount in it for you, responsible you.

Discounts Can Diminish the Address Factor

You can always take measures to lower your auto insurance rate. Over time, discounts can go a long way to saving you a nice amount of money. When you are comparing quotes on car insurance premiums, ask your licensed agent about these discounts.

Safe Vehicle Discounts

If you have anti-theft devices, anti-lock brakes, passive restraint, a new car or daytime running lights, you may see a price break.

Senior Discounts

It's sometimes called a mature driver discount, but it pays to be a seasoned driver!

Low-Mileage Discount

The less you drive, the less you pay. It's that simple.

Group Insurance Discount

Ask about discounts for fraternities, sororities, organizations, employers, alumni.

Accident-Free

After three years, you're entitled to a discount by your insurer if you have no accidents on your record. Kudos.

Homeowner Car Insurance

Homeowners are considered lower-risk people. Go figure!

Multi-Car Discounts

This is a very commonly offered discount by most insurance companies. 

Multi-Policy Discount

If you bundle any two policies, you'll probably get a discount on your car insurance policy.

Paid-in-Full Discount

If you pay in advance for a whole year of car insurance, most insurance companies will charge you less.

Loyalty Discount

You can get a discount—not always, but sometimes—for being with a company for several consecutive years.

Safe-Vehicle Discount

If you have anti-theft devices, anti-lock brakes, passive restraint, a new car, daytime running lights or other safety innovations, you may get a price break.

Telematics Discount

Devices that track driving behavior often qualify drivers for discounts based on their safe, defensive driving.

Military Discount

Many car insurance carriers will charge you less for car insurance if you are an active or retired service member.

SmartFinancial Does the Shopping for You

Now that you have the full answer to the question "Does your address affect car insurance?" start comparing car insurance rates in your area. You're probably paying too much for car insurance coverage right now. You can do better with SmartFinancial, which uses smart algorithms and artificial intelligence to cherry-pick the best, lowest-cost policy for you.

To start the free—and pain-free—process, simply type in your zip code below and answer a few questions so we can get to know you and your unique situation. In a matter of minutes, you'll be able to choose a plan that fits your budget and specific insurance needs. Yes, getting a new policy is that easy.

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