If you move from the suburbs to the city, from one side of town to the
other, or even a few blocks away, better check your policy at renewal
time. Although several factors affect your car insurance premium, one
of the hot issues in the past few years has been the relationship
between your premium and your zip code.
• Driving Record
• Number of Miles Driven
• Where You Live/Garage (zip code)
• Age of the Driver
• Type of Vehicles Owned
• Amount of Coverage
You may be a good, experienced driver, but when it comes to auto
insurance in many states, your zip code is your identity. Just because
you live in an expensive downtown loft with with a secure garage doesn’t
guarantee lower insurance rates.
Insurance companies use a variety of things to determine how much the
risk is on a particular policy. Where you live, who lives in your
neighborhood, (families, young single people, etc.), what kind of car or truck
you drive, the amount of traffic in the neighborhood, and the number of
claims within that neighborhood, are just some of the things that will
determine what certain rates are in a particular zip code.
The cost of your truck insurance is also influenced by the crime rate in
the area you are living or garaging your truck. If you reside in a neighborhood where the risk
of vandalism, theft and other crime is high, the rate of your auto
insurance increases accordingly in many states, even if you have a
spotless driving record. Where you reside makes a lot of difference.
Those who live in areas where there is little or no traffic will
definitely spend less on insurance premiums compared to those who live
in cities and congested suburbs. Obviously, areas with a lot traffic are
more prone to accidents.
California found this rating scheme unfair and discriminatory
California’sProposition 103, once enacted, ended the premium based on zip code
practice, and rates actually went down for many people. This law
requires that insurers base their premiums not on one’s zip code, but
primarily on one’s driving safety record, annual mileage, and driving
Consumers Union (CU), an independent, nonprofit organization whose
mission is to work for a fair, just, and safe marketplace for all
consumers, presented detailed documentation at public hearings before
the state insurance commissioner, showing that the zip code-based rates
hurt good drivers. The organization also issued a report that showed
insurers were charging good drivers living in ‘s
predominantly African-American and Latino zip codes substantially more
for automobile insurance than good drivers in predominantly white
communities. Zip code profiling in insurance has been viewed by some as
one of the most tenacious forms of discrimination. For decades good
drivers in minority residential neighborhoods have been charged more.
Consumers Union argued that basic economic fairness should mean that
your driving record, not your zip code, should shape your premium.
Since the state of California has changed its rating methods, CU continues to urge other states to
follow in California’s footsteps. While some states have, others still
rely heavily on zip codes to determine the insurance rates their