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Does my Place of Residence Affect my Premium?

  • Corey
  • Nov 7, 2016

Where you live is one of the major factors in determining your auto insurance premium because your place of residence influences both the likelihood of being involved in an accident and the costs associated with repairs and medical expenses. Population density, weather, crime rate and local infrastructure are also determinants. Your premium can even be affected by length of your daily commute!

Factors that Raise Premiums

Urban residents usually pay higher premiums due to the risks associated with a high stress driving environment. The greater the pedestrian and street traffic, the higher the likelihood of collision or injuring another.

Related to urban living is the quality of infrastructure. Premiums are lower in cities and towns where roads are well maintained and safe to drive on, but in cities like Detroit, Michigan, with its numerous potholes, limited or confusing road signs and hazardous intersections, means individuals are subject to higher rates.

Insurers will also charge higher premiums to residents in areas prone to severe weather, especially regions with heavy snowfall and ice during the winter. Areas prone to natural disasters, hail storms and floods can also expect higher premiums.

Crime rate is another significant factor in determining your premium. Vehicles are subject to theft, vandalism and break-ins. The odds of such incidences occurring are greater in neighborhoods with higher crime rates.

A high unemployment rate in your town or city can increase insurance rates since the chances collision with uninsured drivers are higher. Insurance companies need to pay in the event of a collision with these individuals; extra costs are then passed on to the insured.

Factors that Lower Premiums

Living in the countryside means lower rates, but for those in the city, parking your car in a secure garage is one way of avoiding high premiums. If you live close to work or school, premiums can be lower since a shorter commute is less likely to encounter an accident. In an area with low rates of car accidents, competition among insurers will reduce premiums.



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