What price your zip code?

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Everyone who has car insurance knows the reality of zip code discrimination. We all talk with family and friends and understand how unfair life can be when the rates for similar makes and models vary so much, just by changing the address by a few blocks. Sometimes you wonder whether it’s a good thing to find out exactly how much the rates change. There’s greater peace of mind not knowing how much more you’re paying. But, for better or worse, here comes some research from California.

We need to start off by confirming California has some of the most affordable car insurance in America. This flows directly from the electorate which passed Proposition 103 in 1988 and began the process of reining in excessive rate increases. The result is current premium rates which have not risen in real terms over the last twenty years.

This does not prevent the local insurance industry from using statistical information about the nature of the claims made, their value, and where the claims originate. Sadly, instead of there being rates for cover no matter where you live, there are major differences depending on your address.

There’s a new study based on data collected throughout California in 2013. It takes account of the driver’s experience, safety record and, of course, residential address where the vehicle is garaged. So let’s start off with the big picture. As a generalization, cities in the south of the state had higher premium rates than cities in the north. At a more detailed level, the researchers looked at car insurance quotes from fifty-two insurers on addresses in 270 zip codes. The study asked for quotes based on hypothetical married and unmarried drivers of a 2012 Toyota Camry averaging 8,000 miles a year. The highest average quotes were found for single drivers in Glendale at $1,823. Married couples paid $1,740. These quotes are 62% higher than the average cost for the mandatory minimum liability cover. As a comparison with a large city, the rates in San Francisco were: $1,355 for a single driver and $1,274 for a married couple — this ranked twentieth out of the 210 cities. Overall, the cheapest city for car insurance was Calexico.

Now if you were to ask the insurers why there was such a big difference, they would tell you the rates are based on the number of accidents and the value of the claims made. It seems the residents of Glendale not only crash into each other on a regular basis, they are also more likely to cause physical injuries. The area also has one of the highest numbers of uninsured drivers on the Californian roads. Put these factors together and you explain the high rates. More generally in the south, there’s more traffic congestion and higher rates of vehicle theft than in the north. Because there can be up to 300% difference between the most and least expensive quotes, it pays to shop around no matter where you live.

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