The difference your zip code is making to your auto insurance rates

California auto insurance
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California auto insurance

Some motorists are paying more just because of where they live

Though most drivers know that the type of vehicle they drive and the marks on their driving record will have an impact on the premiums they pay for auto insurance, what they may not realize is that their zip code also plays an important role in that calculation.

Proposition 103 states that California insurers need to downplay the weight of the zip in calculating premiums.

It has been in place for decades, and while driving experience must be weighted more heavily than the little five digit code, that number is still factored in and can mean the difference of thousands of dollars over time.

Research performed with hypothetical profiles where only the zip code was changed gave surprising results.

In some states, the same driver profile with different zip codes was found to alter an individual’s auto insurance rates by up to 82 percent. In one case, it went from as low as $730 per year to a rate that was as high as $4,217 for the same person during the same span of time, for the same vehicle, but in a less favorable area.

This was not as dramatic in California, because of the regulation put in place by Proposition 103, but some quotes still produced a difference from a low of $990 to a high of $2,400 for the same profile, where the only difference was the individual’s address.

Some research also indicated that it is vitally important to compare prices among various insurers when shopping for auto insurance, as the company itself can make a notable difference to the size of the quote. Using a single zip code and profile in central Los Angeles, a survey was performed including the top six insurers, which included Allstate, Progressive, State Farm, and GEICO, among others, and there was a tremendous rate discrepancy. The lowest quote for the same individual at the same address and with the same vehicle was $1,106, and without altering any details except for the insurer, the highest annual rate quoted was $3,136.

This clearly shows that it pays to do your homework when you’re on the market for auto insurance.

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