Which ZIP Codes Have the Cheapest Auto Insurance Rates?
Last Updated on September 2, 2020
You may have heard that your ZIP code impacts auto insurance rates. It’s true: insurers consider your ZIP code when pricing premiums.
Some ZIP codes are more expensive for auto insurance, while others are cheaper. Insurers have decided certain ZIP codes are associated with a higher risk of making a claim, so they charge higher rates to drivers living in those ZIP codes.
What’s the cheapest auto insurance ZIP code? Which ZIP codes have the cheapest auto insurance rates? Which ZIP codes have the most expensive car insurance? Let’s find out.
How ZIP Code Impacts Car Insurance Premiums
Insurance is all about risk. When you buy car insurance, you’re paying someone else – your insurance company – to absorb your risk. Your insurance company agrees to compensate you for unexpected events, including theft, vandalism, or accidents.
ZIP code plays a significant role in risk. Based on your ZIP code, you might pay hundreds of dollars more per year for car insurance.
Here are some of the ways in which ZIP code can play a role in car insurance:
High Accident Rate: Some ZIP codes simply have higher accident rates than others. Maybe you drive through a notoriously dangerous intersection every day. Maybe your section of the freeway has a higher-than-average number of accidents.
Density: Generally, people living in dense cities pay higher car insurance premiums than people living in remote, rural areas with sparser populations. Density is typically associated with higher crime and accident risk.
Weather: Some ZIP codes have better weather than others. Someone driving in rural Florida, for example, is unlikely to encounter a blizzard, while someone driving in rural Montana is. Weather can increase the risk of accidents. It can also damage vehicles directly – like through hail damage.
Flood Risk: Do you live in a flood-prone area? Certain areas are more prone to flooding than others. If a flood damages your garage with your car inside, your insurer may have to pay.
State Laws: Some states have higher insurance requirements than others. Some states require drivers to carry considerably more car insurance than others. If you move from a state with cheap car insurance (like North Carolina) to a state with expensive car insurance (like Michigan), you may be shocked at the price difference.
Natural Disasters: Do you live in an area at risk of forest fires? Do you live near an earthquake or tsunami zone? What about hurricanes or tornadoes? Natural disasters cost insurers billions when they strike. You’ll pay higher rates if there’s a higher risk of natural disasters in your ZIP code.
Crime: Some ZIP codes have significantly higher crime than others. If you frequently park your car in a ZIP code with thousands of car thefts per year, then you’re going to pay more for car insurance. Some ZIP codes are also associated with higher rates of vandalism, break-ins, and other crimes, all of which increase the likelihood of making a claim – and boost car insurance premiums.
The Most Expensive ZIP Codes for Car Insurance in Each State
If you look at a list of the cheapest and most expensive ZIP codes for car insurance in each state, you’ll notice a pattern.
In most states, the most expensive ZIP codes for car insurance are ZIP codes near the center of big cities. These ZIP codes are crowded with people. They have a higher traffic volume. Many have higher rates of crime.
Other ZIP codes are located in big cities – but outside of the downtown area. These expensive ZIP codes may have higher rates of break-ins or vandalism. Drivers in certain ZIP codes around Detroit, for example, pay some of the costliest car insurance premiums in America, on average, due to high vehicle crime.
CarInsurance.com analyzed the cheapest and most expensive ZIP codes for car insurance in each state. They found similar results: the most expensive ZIP codes tended to be in big cities, while the cheapest ZIP codes tended to be in small towns and remote rural areas.
Some of the notable ZIP codes identified in the report include:
- Drivers in the 48226 ZIP code in Detroit, Michigan pay higher car insurance premiums on average than drivers in any other ZIP code in the United States. This ZIP code covers downtown Detroit. Drivers pay approximately $6,500 per year for car insurance.
- Drivers in the 11212 ZIP code of New York pay the second-highest average car insurance rates in the United States. Drivers in this corner of Brooklyn pay approximately $5,800 per year for car insurance.
- Other expensive ZIP codes for car insurance included 70117 (New Orleans, Louisiana), 89101 (Las Vegas, Nevada), 91605 (North Hollywood, California), 19140 (Philadelphia, Pennsylvania), and 21216 (Baltimore, Maryland).
- In almost every state, the most expensive ZIP code for car insurance is in a major city. Cities like St. Louis, Providence, Chicago, Hartford, Phoenix, Dallas, Denver, Milwaukee, Tulsa, Washington, and Memphis, for example, all appear on the list because they’re some of the biggest urban areas in each state.
The Cheapest ZIP Codes for Car Insurance in Each State
Other ZIP codes have the opposite effect. Some ZIP codes are associated with cheaper car insurance premiums.
Typically, these ZIP codes are quiet, rural towns. They have low population density. They don’t have a rush hour. Some don’t have much traffic at all. They also tend to be safe. With low rates of break-ins and thefts, insurers rarely have to pay total loss claims to policyholders.
The same CarInsurance.com study linked above identified some of the cheapest ZIP codes in the United States, including:
- Drivers in the 04735 ZIP code (Bridgewater, Maine) pay the cheapest car insurance premiums in the United States, paying just $990 per year for car insurance, on average.
- Drivers in St. Marys, Ohio (45885) and Lebanon, New Hampshire (03766) pay equally cheap rates for car insurance, paying around $1,000 per year, on average for car insurance, making them the second and third cheapest ZIP codes in America for car insurance.
- Other ZIP codes ranked among the cheapest in America include 24060 (Blacksburg, Virginia), 54952 (Menasha, Wisconsin), 02554 (Nantucket, Massachusetts), 46711 (Berne, Indiana), and 83716 (Boise City, Idaho).
Final Word – Cheapest Auto Insurance ZIP Codes
You shouldn’t move to a ZIP code specifically for lower car insurance premiums. However, it’s something to consider when finding a place to live – especially if you’re moving from a rural area to a big city. Many drivers are shocked to see insurance prices nearly double after the move – simply because they changed their ZIP code.
Remember: no matter where you live, you can compare car insurance prices online just by entering your ZIP code, helping you pay the cheapest possible rates for car insurance wherever you live.