Why is Auto Insurance So Expensive in Philadelphia?

Last Updated on October 20, 2021

Drivers in Philadelphia complain about a lot of things – including high car insurance premiums.

Do drivers in Philadelphia really pay more for car insurance? Is car insurance more expensive in Philly compared to similar cities?

Compared to other states, Pennsylvania has some of the cheapest car insurance rates in the United States. Drivers in Pennsylvania pay some of the lowest car insurance premiums in the country, on average.

In Philadelphia, however, many drivers pay high rates for car insurance. Philly has high numbers of uninsured drivers. Some ZIP codes have higher rates of crime. And some areas of Philly are congested with traffic, leading to higher-than-normal accident and claims rates.

Today, we’re explaining why auto insurance is so expensive in Philadelphia.

Pennsylvanians Pay Cheaper Car Insurance Premiums than Most Other States

Why is Auto Insurance So Expensive in Philadelphia?Certain states have notoriously high car insurance premiums statewide. Pennsylvania, however, is not one of those states.

Michigan, Louisiana, Florida, Texas, and California, for example, have some of the most expensive car insurance premiums in the United States.

According to a recent study, however, Pennsylvania is one of the top 10 cheapest states in America to insure a vehicle. Pennsylvania ranked as the 10th cheapest state in the country for car insurance, trailing Maine, New Hampshire, Ohio, Wisconsin, Idaho, Iowa, Indiana, North Dakota, and Virginia for cheap car insurance premiums.

The average driver in Pennsylvania pays approximately $1,200 to $1,350 per year for car insurance.

However, things change in Philadelphia. Philadelphia is the largest city in Pennsylvania. Much of Pennsylvania consists of smaller towns, boroughs, communities. The Philadelphia metro area, meanwhile, has more drivers – and a denser population – than anywhere else in the state.

Because of these factors, drivers in Pennsylvania pay more for car insurance than drivers in other parts of Pennsylvania.

In fact, some studies show drivers in Philly pay as much as $4,000 to $5,000 per year for car insurance.

Why Urban Drivers Pay More

In most states, drivers in big cities pay more for car insurance than drivers in more rural areas. Drivers in New York City, for example, tend to pay more for car insurance than drivers in upstate New York, and drivers in Chicago pay more for car insurance than drivers in rural areas of Illinois.

Similarly, drivers in Philadelphia typically pay more for car insurance than drivers in more rural areas of the state.

Why do drivers in big cities like Philadelphia pay more for car insurance? Here are some of the factors that impact car insurance rates for drivers in big cities:

Density: Cities have more people than small towns. That means there are more cars on the road, more pedestrians walking around, and more cyclists. Typically, accident and claim rates increase with population density. You’re more likely to get into an accident in downtown Philadelphia than on a remote state road. A driver in Philadelphia might pass 10,000 vehicles in an average commute, while a driver in a rural area passes only 50 vehicles. More density means higher claims rates, which means higher insurance premiums for drivers in Philadelphia.

Higher Crime: ZIP codes in big cities tend to have higher crime rates than ZIP codes in rural areas. Certain ZIP codes have more vehicle break-ins, vandalism, and vehicle theft, for example. If your vehicle is stolen, then your insurance company compensates you for the value of that vehicle. If you live in a ZIP code with a high rate of vehicle theft, then your insurer has added risk.

Higher Accident Rates: Insurers analyze accident rates in each ZIP code to assign premiums. Some ZIP codes have significantly higher accident rates than other ZIP codes. Typically, ZIP codes in larger cities with more traffic have higher accident rates than more rural ZIP codes. Based on accident data, insurers charge higher or lower premiums.

Why Philadelphia Drivers Pay More

The factors listed above affect all cities – whether you’re in Boston, Los Angeles, or Philadelphia. Big cities have higher density, and that tends to lead to higher accident rates and premiums.

However, these factors alone cannot explain why car insurance is so expensive in Philadelphia. There are certain factors in Philly that impact car insurance premiums more than the average city:

Crime: Philadelphia is a safe city overall, although certain ZIP codes in the Philadelphia metropolitan area have higher rates of crime than others. Insurers consider ZIP code when calculating premiums. If you park your car on the street every night in an area of Philadelphia with high rates of break-ins, theft, and vandalism, then you’ll pay more for car insurance.

Traffic: All cities have traffic, although Philadelphia has particularly bad traffic problems. The Schuylkill is jammed every day. The Blue Route is constantly congested. Drivers in the suburbs and exurbs commute long distances into the city center, leading to traffic jams across the Philadelphia metropolitan area. Traffic and lengthy rush hours are associated with higher rates of accidents and claims, and that means higher risk for insurance companies – and higher premiums for drivers.

Uninsured Motorists: Nationwide, approximately 1 in 7 drivers do not have car insurance. In Philadelphia, thousands of motorists drive without insurance every day. Pennsylvania has lower rates of uninsured drivers than the national average, with about 10% of drivers in Pennsylvania being uninsured. However, Philadelphia has higher rates of uninsured drivers than other areas of Pennsylvania. That means thousands of drivers have no insurance whatsoever, and insurers need to bear these costs regardless.

How to Save Money on Car Insurance in Philadelphia

Car insurance is expensive in Philadelphia, and drivers in Philadelphia pay some of the highest car insurance premiums not just in Pennsylvania – but in all of the United States.

Fortunately, you don’t have to resign yourself to paying $3,000 or more per year for car insurance in Philly.

Instead, compare quotes online today. Check rates with local providers and nationwide insurers. Some insurers are more accommodating to urban drivers, while other insurers prefer rural or small town drivers.

By comparing quotes with multiple insurance providers, you can pay the lowest possible rates on car insurance in Philadelphia.

Final Word – Philadelphia Auto Insurance Rates

According to some studies, drivers in Philadelphia pay $4,000 to $5,000 per year for car insurance – nearly 3 to 4 times the statewide average in Pennsylvania.

Drivers in big cities generally pay more for car insurance than drivers in smaller towns. Population density impacts car insurance premiums because it’s linked with higher crime and accident rates.

However, Philadelphia has unique factors that raise car insurance premiums even further. Certain areas of Philly have higher rates of crime. Other areas have high rates of uninsured drivers.

Because of these factors, drivers in Philadelphia pay some of the highest rates in the United States for car insurance. Fortunately, by comparing car insurance premiums and taking advantage of discounts, drivers in Philadelphia can find plenty of cheap car insurance options.

James Shaffer
James Shaffer James Shaffer is a writer for InsurancePanda.com and a well-seasoned auto insurance industry veteran. He has a deep knowledge of insurance rules and regulations and is passionate about helping drivers save money on auto insurance. He is responsible for researching and writing about anything auto insurance-related. He holds a bachelor's degree from Bentley University and his work has been quoted by NBC News, CNN, and The Washington Post.
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