Yes. Your location vastly affects your insurance rates in many ways, and for all types of insurance products. For the sake of keeping this blog post concise, we’re going to examine auto insurance and how your location affects your auto insurance rates.

One way insurance companies evaluate their rate-making is by looking at historical loss ratios in certain areas, whether it be by zip code, county, or state, insurance companies will look at historical data to give them a projection of what future rates need to be to remain profitable. By making rates higher in these areas it helps offset losses and gives them a larger margin for error, or margin for large claims. State laws also affect these rates. No-fault states such as Kentucky and Michigan, generally charge higher for auto insurance due to the intense legal landscape and fraudulent claims that arise due to these laws.

Insurance companies also set rates by the number of cars in an area. For instance, in our Philadelphia office, clients see a much higher rate when living in the city as opposed to living on the Main Line or even in Delaware or New Jersey. Cities generally carry higher insurance rates than their suburban and rural counterparts. Why exactly? Well, an increased amount of drivers in a small area means more accidents, more theft, more vandalism, more fraud, etc. Also, vehicles in the city utilize street parking much more instead of parking in a nice, safe garage or driveway. All of these factors combined can swing your auto insurance rate one way or the other.

As our client, we’re constantly asked about these things as clients move around the country or the states we represent. Often times, rates go down significantly as young people flee the city for more space to raise a family in the suburbs. Regardless of your situation, we’re very happy to explain and rate fluctuation and help you find the best policy that suits your needs. Many times, different companies have vastly different pricing per location so switching companies is always an option and something we’re very happy to help with.