Most insurance ads would have you believe that your premium is based solely on your driving history. They talk about forgiving motorists for accidents and reducing premiums for those who don't file claims.
But the truth is, your insurance rate is largely determined by your neighbors. To prove it, CarInsurance.com pulled quotes from ZIP codes across the U.S., and the findings show that what you pay for auto insurance is frequently out of your responsible little hands.
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To ensure apples-to-apples comparisons, study leaders got quotes on a 2014 Honda Accord -- a perennially popular car and one of America's ten best-selling vehicles. The Accord is attractive in studies like this because it's so neutral: it's not a sports car, for example, which would increase its premium, nor is it commonly used as a commercial vehicle like a van or pickup, which could also cause a rate uptick.
Study organizers then pulled annual insurance rates on the Accord from 33,401 ZIP codes across the country. For consistency, researchers assumed an owner who was male, single, and 40 years old, with a clean driving record, a good credit score, and a 12-mile daily commute. The policy was a 100/300/50 (i.e. $100,000 liability coverage for one person, $300,000 for all injuries, plus $50,000 for property damage) with a $500 deductible.
Given all that, CarInsurance.com found America's ten lowest insurance rates in these ZIP codes:
1. Green Springs, Ohio, in ZIP code 44836: $647
2. Arden, North Carolina, in ZIP code 28704: $671
3. Saco, Maine, in ZIP code 04072: $709
4. Christiansburg, Virginia, in ZIP code 24073: $751
5. Boise, Idaho, in ZIP code 83706: $753
6. Lake Havasu City, Arizona, in ZIP code 86403: $769
7. West Lafayette, Indiana, in ZIP code 47907: $770
8. Allouez, Wisconsin, in ZIP code 54302: $776
9. Concord, New Hampshire, in ZIP code 03303: $785
10. Normal, Illinois, in ZIP code 61761: $827
At the other end of the scale, the highest-paying ZIP codes tended to be in large metropolitan areas:
1. Detroit, Michigan, in ZIP code 48227: $5,109
2. Brooklyn, New York, in ZIP code 11226: $3,877
3. Philadelphia, Pennsylvania, in ZIP code 19132: $2,760
4. Providence, Rhode Island, in ZIP code 02903: $2,749
5. New Orleans, Louisiana in ZIP code 70117: $2,542
6. Los Angeles, California in ZIP code 90029: $2,416
7. Woodbridge, Connecticut, in ZIP code 06525: $2,291
8. Baltimore, Maryland, in ZIP code 21216: $2,256
9. Miami, Florida, in ZIP code 33142: $2,248
10. Royalton, Kentucky, in ZIP: code 41464: $2,104
No, your eyes aren't deceiving you: the difference between the most- and least-expensive ZIP code is nearly $4,500 per year. How is that possible? Survey organizers explain:
Based on the number and severity of car insurance claims within the area, insurers assign ZIP codes different risk levels. Insurers take into account the frequency of thefts, collisions and vandalism to gauge the likelihood of such incidents happening to drivers within the ZIP code. This is used as the base rate from which insurers calculate your premium. Other pricing factors, such as your driving record, type of car you drive and your age are then added into the calculation.
For those afflicted with TL;DR Syndrome, that means that your home ZIP code is the primary determinant for your insurance rate. Everything else -- your driving history, credit score, and the kind of vehicle you're insuring -- are secondary to that.