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How Does My Location Affect My Auto Insurance Rate?

factors that affect car insurance ratesFrom your age and your driving record to your marital status and your credit score, there are many factors that play a role in determining your auto insurance rate, and your location is an important one. Your place of residence has a significant effect on your car insurance premium, because insurance companies examine data that determines which areas residents are most likely to file claims.

These types of claims fall into two categories: claims arising from an auto accident, and claims resulting from vandalism or theft of your vehicle. Generally speaking, insurance companies calculate your likelihood of an auto accident based on the county or state in which you live, and calculate your risk of vehicle theft or vandalism based on the city or neighborhood in which you live. Here’s why:

In terms of auto accidents, you typically get into an accident while your car is moving, and you likely drive at least several miles each day. As you drive, you encounter other vehicles that have and continue to travel a certain number of miles each day as well. In other words, your odds of being involved in an auto accident depend on what’s happening on all of the roads on which you travel.

On the other hand, car theft and vandalism typically occur while a vehicle is parked, so the location in which your park your car plays the most important role in calculating your odds of theft or vandalism.

You may hear people say that you’ll pay higher car insurance rates if you rise in a city as opposed to a rural area, but it actually isn’t that simple. Although it’s true that several of the states with the lowest average auto insurance rates – Vermont, South Carolina and Maine – are predominantly rural with few large urban areas, two of the states with the highest average rates – Oklahoma and Montana – are also largely rural.

What Causes High Car Insurance Rates in Rural Areas?

With wide open spaces and a small population, why would a state like Montana have higher than average car insurance rates? You may think this can be attributed to the famous no-speed-limit highways the state once had, but this is not the case. Instead, it’s because Montana residents, like those in many other rural states, travel relatively long distances as part of their daily routine, and more time on the road means a greater likelihood of an auto accident.

In other states, like Mississippi, a high percentage of uninsured drivers cause auto insurance rates to increase. Considering that fewer people have insurance relative to the state’s population, insurance companies have to charge higher premiums to help cover the higher expenses associated with accidents.

In addition to long traveling distances and high percentages of uninsured drivers, weather, treacherous roadways, and relatively high percentages of drunk drivers represent several other factors that affect car insurance rates. In Oklahoma’s case, the state’s frequent hail storms that leave vehicles full of dents can explain the relatively high auto insurance rates, since many vehicle owners rely on their insurance company to cover the damage.

City Living: Should you Move?

It likely wouldn’t make sense for you to move to another state just to save money on your car insurance, but if you’re open to relocating within the same city you may be able to reduce your rate. If your neighborhood is prone to car theft, for instance, you’re probably paying more for your car insurance than you would if you lived in a quieter, suburban neighborhood.

If you’d rather remain in your current neighborhood, here are a couple of ways you can try to reduce your rates:

  • If you normally park on the street, you may be able to reduce your rates slightly by parking in a locked garage instead.
  • If your car contains theft-deterrent equipment, you may save a small percentage on your premium. If it doesn’t contain this type of equipment and you’re living in a relatively theft-prone area, consider having it installed as both a safety precaution and as a way to save on your insurance over the long term.

Your location is just one of the many factors that affect car insurance rates, and insurance companies differ in regard to how they weigh all of these determining factors. At Eaton & Berube, our agents work with more than 20 reputable insurance companies and will ensure that you’re getting the best possible deal on your auto insurance, regardless of where you live. To get a free quote for New Hampshire auto insurance, please call us today at 603-882-2766 or click below to submit our online quote form.

factors that affect car insurance rates

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