Car Insurance Rates Affected By The Neighborhood You Live In
Just as home prices, rent and rental insurance rates vary according to where a property is located, car insurance rates will vary by the neighborhood you live in, too. Car insurance companies evaluate the applicant’s physical address according to their determination of the statistical risk, such as crime, theft, and auto accidents, imposed by the area and price premiums based on this information. Overall, if you live in a good, clean neighborhood with low rates of accidents, thefts, and insurance claims, you will get cheaper car insurance rates.
Evaluation of Risk
“Risk” is a term used frequently by insurance companies to describe factors which would contribute to filing a claim. For instance, living in a high-crime area will increase your risk level for both home and auto insurance due to the likelihood of the home or car being stolen or vandalized.
Insurance companies use extremely detailed mathematical charts called actuarial tables to determine risk from close statistical analyses of risk factors. Although sometimes being pigeonholed in this way seems unfair, the statistics are typically accurate and car insurance prices are adjusted.
Safe vs. Unsafe Locations
By and large, auto insurance rates are lower for rural, semi-rural and suburban areas due to their lower crime statistics. Auto insurance companies pay close attention to the studies and polls regarding safety and price their policies accordingly.
However, crime isn’t the only thing which will classify a neighborhood as safe or unsafe. Weather patterns also factor strongly in the equation. A state or area which has high incidents of major storms such as tornadoes, floods, earthquakes and hurricanes will not be as “safe” because these areas will also have high levels of damage claims for water damage, hail, tree-fall and other perils.
Other Risks
The kind of vehicle driven, make and model car is also an important risk factor which actually relates to location. A sporty car with a low undercarriage and front-wheel drive would not fare well in a rural setting, nor would it get good rates in the city because of the possibility of theft.
Car insurance companies got into legal trouble in the past by profiling areas and vehicles too strictly for theft by using a policy called “redlining,” which ended up dividing neighborhoods into largely ethnic groups, with minorities being deemed as riskier. Now insurers must be much more careful in their profiling to avoid discriminatory practices.
Lowering Risk Proactively – Cheaper Rates
Most people won’t relocate to the country just to reduce their auto insurance rates, so those who live in high-risk areas and cities must actively do things and get discounts to lower their premiums in other ways.
Purchasing a new car which has performed well in industry safety tests, has an anti-theft or alarm system, damage-prevention features anti-lock brakes, traction control, and airbags for the driver and passengers will help lower car insurance rates more than almost anything else.
Additionally, parking your vehicle in a garage, carpooling, and limiting the number of miles driven per year will also bring down payment prices by reducing the risk of accidents and damage. Learn more about how to get discount car insurance.
Cheap Car Insurance
Although your car insurance rates will vary by the neighborhood you live in, that doesn’t have to be the only determining factor when trying to get cheaper car insurance. By actively pursuing discounts and comparing policy prices from several insurance companies using car insurance quotes online, you can decide which company and level of coverage is best in your situation. Comparing online quotes will also yield savings that will get you the cheapest car insurance rates.
