Auto insurance varies by ZIP code

Data show moving from one neighborhood to the next could cost thousands in rate hikes.

When it comes to automobile insurance, where you live determines your cost as much as what you drive or how you drive it.

The average American pays $1,470 annually to insure a vehicle. But move to Maine, and that rate will drop by almost half. Motor to Michigan, and it will nearly double — even if nothing about your vehicle or driving habits change.

It’s not just your state. It’s also your ZIP code. Urban dwellers generally pay more for insurance than rural residents, with premiums sometimes tripling when you move from the farm to the city.

A resident of the bucolic Finger Lakes community of Corning, New York, for example, could face a 265 percent increase in insurance just by relocating to Brooklyn. That’s a hike of nearly $3,000 a year.

“I think a good number of folks —though certainly still not all — know that car insurance costs vary by state,” said Alyssa Connolly of auto insurance comparison website The Zebra. “However, when they find out it varies by as granular a variable as ZIP code — and that they could pay a different amount for insurance than their friend two blocks away — they’re frustrated and confused.”

The Zebra examined more than 61 million rates across the country for its 2019 State of the Auto Insurance Report and shared some of its data with GateHouse Media. The numbers reveal vast disparities based on not only geography, but the type of vehicle and the driving history.

ZIP codes available for all states EXCEPT Alaska, Arizona, (District of Columbia), Hawaii, Idaho, Kentucky, Maryland, Mississippi, Montana, Nevada, New Mexico, South Dakota, Utah, Vermont, Washington, Wisconsin or Wyoming.

Rates also fluctuate with seemingly unrelated factors, like gender, marital status, educational attainment and credit rating.

Sometimes they increase for no apparent reason at all.

Rachel Bruen’s premium jumped 25 percent in May when her policy automatically renewed, the Pennsylvania graphic designer said.

“I wasn’t in a car accident, never got any speeding ticket, nothing,” Bruen said. “But it just went up by, like, $15 a month for no reason.”

Bruen was paying $708 annually on her 4-year-old Subaru Impreza — about half the average price for her ZIP code in the southeastern community of Reading. But she owns her own home, has a good driving record, and her vehicle is among the least costly to insure.

“They have been doing this to me every time my policy updates,” Bruen said. “I usually call them, and then they always drop it again. I guess they’re banking on me not complaining.”

But after two weeks of calling her insurance company and getting no answer, Bruen said she switched to Geico and got a better deal. Her rate dropped to $636.

Women pay more than men

Annual auto insurance premiums have risen about 23 percent nationally since 2011, when they were at an average of $1,194, according to The Zebra.

The country’s inflation rate, by comparison, climbed by just half that during the same period.

States with the biggest rate hikes include Colorado, Rhode Island, Louisiana, California and Florida — all of which jumped by at least 50 percent. Colorado’s average rates nearly doubled from $944 to $1,682.

Just seven states saw reductions: Maine, Hawaii, New Mexico, New York, Arkansas, Connecticut and Oklahoma. Oklahomans saved an average of $379 on car insurance premiums compared to 2011.

The Zebra generated its numbers based on the profile of a 30-year-old, single, male with a 2014 Honda Accord EX, a good driving history, and a standard insurance policy including injury liability, property damage liability and a $500 deductible for comprehensive and collision.

Deviations from this profile impact price. Women, for example, pay more than men — a less than 1 percent difference overall, but as high as 6 percent more in Nevada. And married drivers pay about 6 percent less nationally than their single friends.

The vehicle, too, makes a difference. Cars generally cost more to insure than trucks — about $500 higher annually on average — and the newer the model regardless of the vehicle, the more expensive the premium.

Among the most costly is the Audi R8, whose drivers pay more than $4,100 annually for insurance, based on the national average. Subaru Outback owners, by comparison, pay just $1,392.

Click car logos to see average rates

Michigan feels the pinch

Although rates have climbed since 2011, their bite out of the American budget remains about the same. Families still spend an average of 1.5 percent of their annual household income after taxes on auto insurance, according to data from the Bureau of Labor Statistics’ Consumer Expenditure Survey.

Anything over 2 percent is considered unaffordable in minority and low-income neighborhoods, according to the U.S. Treasury Department’s Federal Insurance Office in a 2017 report.

The report found 18.6 million people living in more than 800 such neighborhoods across the United States — two-thirds of them clustered in Florida, Michigan, New Jersey, New York and Pennsylvania alone.

Michigan especially feels the pinch, with one in seven of its residents falling into this profile.  

That’s because the Great Lake State has the highest car insurance premiums in the nation at an average of $2,693 per vehicle, The Zebra’s data show.

Blame its no-fault insurance law for driving up costs. The regulations, in place since 1973, require drivers to purchase unlimited, lifetime medical liability regardless of who is at fault. Eleven other states also have no-fault insurance laws, but only Michigan requires unlimited personal injury protection.

That policy will change under an insurance reform bill signed by the governor in May that could save consumers up to $1,200 annually when it takes full effect.

Meanwhile, premiums remain steep in Michigan, and even more so in Detroit — the capital of the American automotive industry — where residents pay as much as $6,282 annually to insure just one vehicle.

“It’s higher in Detroit because the cost of an average claim in Detroit is higher, and fewer people have insurance so the likelihood of you being in an accident with an uninsured driver is higher,” said state Sen. Adam Hollier, D-Detroit, who voted in support of the insurance reform bill.

An estimated one in five Michigan drivers lacks insurance, according to the national, nonprofit Insurance Research Council. Only Florida, Mississippi and New Mexico have more uninsured motorists per capita.

Hollier said he and his wife pay about $7,500 annually to insure their three vehicles, two of which are over a decade old and one of which doesn’t even have collision coverage. His best friend in a nearby suburb pays just half that to fully insure two brand-new vehicles, he said.

Within a decade, Hollier will have paid about $40,000 more than his friend on auto insurance.

“That’s a new roof, daycare, college education,” he said. “That stuff adds up really, really fast.”

Lowest rates, highest limits

Maine residents, meanwhile, enjoy the lowest rates in the nation. They pay an average of just $896 per vehicle, The Zebra’s data show.

They also have the fewest uninsured motorists per capita at 4.5 percent. And they live in one of the least auto-populated states with fewer than 1 million registered vehicles on the road, according to Federal Highway Administration statistics.

Yet Maine, along with Alaska, has the highest mandatory minimum bodily injury liability limits in the country — $50,000 per person and $100,000 per accident. Most states require just half that.

“We have some of the lowest rates, yet some of the highest limits,” said Dan Bernier, an attorney who represents the Maine Insurance Agents Association. “But because we’re cheap, you can have higher limits without spending a lot of money.”

Bernier credited several factors for reducing Maine’s premiums: It’s a largely rural state with a low crime rate; its numerous insurance carriers aggressively compete; and its juries rarely award high damages in auto-related lawsuits.

Compare that to nearby Massachusetts, which has five times as many vehicles in an area four times smaller, and boasts a major metropolis with three times as many people than all of Maine. They pay nearly $400 more annually than their northern neighbors.

“When I was single in my 20s and living in Massachusetts, I was paying $1,500 a year for my Pontiac Sunbird,” Bernier said. “When I moved back to Maine, I got married and bought a house. And we were paying $1,500 to insure the house and two cars.”

Now, he said, he pays about $6,000 annually to insure his home and vehicles. But the family has two additional cars and two additional drivers who are among the costliest ages — 19 and 21 years old.

“When it was just my wife and I, we were paying a little over $2,000 for all of that —cars and house and umbrella coverage,” Bernier said. “Having a kid as the primary driver on a car is very expensive.”