Does Where You Live Affect Your Car Insurance?

Where you live is just one of many factors car insurance companies use to determine the cost of your auto premiums. Insurers use your address and ZIP code to set premiums because crime rates, population density, claims volume and frequency, and road conditions — conditions that can all affect the possibility of filing a claim — vary by region and city.

For instance, you’ll usually pay less for auto insurance in rural areas because they typically have fewer people, crimes, and accidents than heavily populated areas. This article explains how insurers use location factors to calculate rates and ways to save money on your car insurance.

Key Takeaways:

• Car insurance rates can vary dramatically from one area to the next.
• Location-related factors like crime rates, population density, weather, state laws, and road conditions affect auto insurance costs.
• Drivers living in high-risk areas can save on auto insurance by asking for discounts, bundling policies, reviewing auto coverages, and comparing car insurance quotes.

How Your Location Affects Car Insurance Rates

Car insurance rates vary based on your location; your state, city, and ZIP code each play a role in the rate you’ll pay. Insurers use the address you park your to determine how likely you are to file a claim for vehicle damage, vandalism, theft, or an accident.

The following location-related risk factors can increase or decrease your premium.

State laws

Each U.S. state has its own laws on coverage types and minimum limits you must have to drive legally. All but New Hampshire require you to have liability coverage, though minimum requirements vary. Some states — like Connecticut, Kansas, and Maryland — also require uninsured motorist coverage, which increases your insurance costs.

Your state might also require personal injury protection (PIP) to pay for your own injuries. No-fault states that require PIP coverage sometimes have cheaper premiums since the coverage limits when you can sue and lowers legal costs.

Population density

Living in a densely populated area can lead to higher car insurance premiums. Accidents are more likely to happen in these areas since more vehicles are on the road.

Packing lots of people into one area increases the chance of traffic congestion and car accidents. Car insurance companies use this data — among other factors — to charge higher premiums in metropolitan areas.

Claims frequency

Insurers also consider the type and frequency of claims filed in an area when calculating rates, plus the parts and labor costs to fix your vehicle. If you live in an area with a high claims frequency and average expenses, you’ll probably pay higher car insurance costs.

Crime rate

Vehicle crimes, like theft and vandalism, also factor into how much you pay based on your address, as these crimes drive up claim costs. People reported over one million thefts across the country in 2023, according to the National Insurance Crime Bureau. California, Texas, Florida, and Washington saw the highest car theft rates for the year.

Uninsured motorists

Roughly one in seven — or 14% — drivers don’t have auto insurance, according to the Insurance Research Council. When an uninsured driver hits your vehicle, your insurer is on the hook to cover your injuries and car damage instead of the at-fault driver’s company if you have collision insurance or uninsured motorist coverage.

You might pay higher premiums if you live in an area with a high percentage of uninsured motorists, like Washington, D.C., New Mexico, or Mississippi.

Climate and weather

If you live in a coastal state like Florida or Louisiana, natural disasters like floods and hurricanes can drive up claims frequencies and insurance costs. The more severe weather, such as tornadoes, snow, and major storms, affect your area, the more you could pay for auto insurance.

Traffic and road conditions

Poor road conditions, like potholes, a lack of traffic lights or signage, and unclear traffic patterns, are common in many cities. Highways with a large amount of traffic funneling from multiple lanes into one or two can cause a lot of traffic congestion.

These road conditions increase the risk of auto accidents, so insurers typically charge higher premiums to cover claims in these areas.

States with the Cheapest Auto Insurance Rates

Curious about which states have the lowest average monthly premiums? Check out the table below to see the top five cheapest states for auto insurance, according to Compare.com data.

Our data found that North Carolina and Hawaii have the lowest car insurance rates of all states, averaging $84 and $86 per month, respectively. These states could have lower auto rates due to fewer major cities, favorable weather conditions, and a lower percentage of uninsured motorists.

States with the most expensive auto insurance rates

The table below shows the average monthly rates for the five most expensive states for full-coverage auto insurance, according to our data analysis.

Drivers in Michigan pay the highest car insurance rates due to the state’s increased catastrophic claims fees and high rate of uninsured drivers. Factors like more expensive healthcare, auto repair costs, and more severe weather may be to blame for Connecticut’s higher car insurance prices.

Cities with the Cheapest Auto Insurance Rates

The table below shows the average monthly premiums for the five cheapest cities for car insurance, according to Compare.com data.

Asheville, North Carolina, and Honolulu, Hawaii, are the least expensive cities for car insurance, with average full-coverage premiums of $59 and $86 per month, according to our analysis. Factors like lower population density, crime rates, favorable weather patterns, and low cost of living keep auto insurance rates low.

Cities with the most expensive auto insurance rates

The table below shows the five most expensive cities for car insurance, according to our data analysis.

Drivers in New York City and Dearborn, Michigan, pay the most for auto insurance: Full-coverage policies in these cities average $460 and $389 per month, respectively, according to our analysis. Car insurance premiums are likely much higher in these cities because of expensive healthcare and auto repair costs. These cities also have higher insurance claims, cost of living, and population density.

How Auto Insurers Determine Car Insurance Rates

Auto insurance companies use multiple rating factors to determine your auto insurance premium. Location is a major factor, as well as the following:

• Age
• Gender
• Driving record
• Claims history
• Marital status
• Credit score

Each insurer has its own algorithm to calculate rates, which is why your insurance costs can vary by company, even with the same coverage. With so many factors affecting auto policies, shopping around is the only way to know if you’re getting the best rate. You can either compare auto insurance quotes on your own or use a comparison site to do the work for you.

How to Get Affordable Car Insurance in High-Risk Areas

If you live in a high-risk neighborhood, you’re probably paying higher rates. Here are some ways to save on your policy without sacrificing auto coverage.

Check for discounts

Applying discounts to your policy is a great way to lower your car insurance costs without affecting your coverage. Insurance companies may introduce new discounts you may not be aware of, so it’s a good idea to check in regularly to ensure you get all the discounts you qualify for.

Review your coverage

Reviewing your policy coverage every year ensures you only pay for what you need. For example, if you have an older car that’s not worth much and you can afford to replace it, you might consider dropping collision and comprehensive coverage.

But if you still need full coverage, consider raising your deductibles instead. Keep in mind that raising your deductible reduces your premiums, but you’ll pay more out of pocket if you file a claim.

Bundle your insurance policies

Using the same insurance company for several insurance products can help you save on your auto insurance. For instance, if you own or rent, you can bundle your home, renters, or condo insurance with your car insurance and get a multi-policy discount on both policies.

Consider usage-based insurance

If you’re a careful driver, you might save big with usage-based insurance. Most insurers offer telematics programs, which track your driving habits and mileage and reward you for safe driving behaviors.

But not all telematics programs only offer discounts. Some companies will raise your rates for high-risk driving behaviors like speeding, cornering, or using your phone while driving.

Drive fewer miles

The less you drive, the less you risk getting into a car accident. You might be a good fit for pay-per-mile insurance if you work from home or don’t drive much. It could save you more than a standard auto policy. With pay-per-mile insurance, you pay a base rate plus a mileage rate, so the less you drive, the more you save.

FAQs About Your Address and Car Insurance

Knowing how your address affects your auto insurance rates can help you better understand your insurance costs. Here are answers to common questions about how location affects car insurance rates.

What’s a garaging ZIP code or a garaging address?

A garaging address or ZIP code is where you typically park your vehicle when you’re not using it.

Your primary residence is usually the garaging address. But in some cases — like when your college-aged child takes a vehicle to school with them — the school’s location might be the garaging address.

Why does your premium increase when you change your address?

Your auto premiums can increase when you change your address because factors like your ZIP code, city, and state play a role in how insurers determine rates.

Your rate could go up or down depending on your new address. It’s best to speak with your insurer to see how moving to a new address will affect your insurance premiums.

Is car insurance more expensive in bigger cities?

It depends. Living in a bigger city can be more expensive, but many other factors affect car insurance costs.

Things like population density, road conditions, weather, crime, and accident rates influence how much you pay. The more people in a small area, the likelier an accident or crime can happen, which leads to higher premiums.

Where do you insure a car if you have two addresses?

You should insure the car at the address where you park it the most often when not in use. For example, if you live in an apartment but spend a few nights per week with your parents, you’d insure your vehicle at your apartment address.

Do you have to change your car insurance when you move?

It depends. You can usually keep your car insurance with the same company when you move, even if you move to a new state unless the insurer doesn’t cover that state. It’s a good idea to contact your insurer before moving to learn if your premium will change at the new address.

Data Methodology

Data scientists at Compare.com analyzed more than 50 million real-time auto insurance quotes from more than 75 partner insurers in order to compile the rates and statistics seen in this article. Compare.com’s auto insurance data includes coverage analysis and details on drivers’ vehicles, driving records, insurance histories, and demographic information.

All the rates listed in this article have been collected from a combination of real Compare.com quotes and external insurance rate data gathered in collaboration with Quadrant Information Services. Compare.com uses these observations to provide readers with insights into how auto insurance companies determine their premiums.

Sources

1. Insurance Information Institute, “What determines the price of an auto insurance policy?,” Accessed May 1, 2024.
2. Insurance Research Council, “14 Percent of U.S. Drivers Were Uninsured in 2022, IRC Estimates,” Accessed May 1, 2024.
3. National Insurance Crime Bureau, “Vehicle Thefts Surge Nationwide in 2023,” Accessed May 1, 2024.
4. United States Census Bureau, “Understanding Population Density,” Accessed May 1, 2024.