A move, especially from a small city to a large one, can have a significant impact on your insurance rates.
Location, location, location. It’s not only the mantra to follow when buying real estate, but also when trying to insure your car, truck or minivan. For those contemplating a big move from one city to another, it might play a role in the decision to move or not.
While most folks know they are going to pay more if they live near a large city, some moves will cause a significant spike in rates that may exceed 500%.
Of the top five increases for what vehicle owners will pay for insurance when they move, not surprisingly, two of the new destinations are in or near Detroit. The top five most expensive moves include:
- Bullhead City, Arizona ($702), to Detroit, Michigan ($4,599) = 555% increase
- Lake Havasu City, Arizona ($711), to Brooklyn, NY ($4,133) = 481%
- Kingman, Arizona ($714), to Dearborn, Michigan ($4,006) = 461%
- Falmouth, Maine ($730), to Bronx, New York, ($3,789) = 419%
- Chloride, Arizona ($731), to New Orleans, Louisiana ($3,530) = 383%
The price increase for the moves to Detroit and Dearborn shouldn’t be that surprising. Detroit and its suburbs pay some of the highest insurance rates in the nation.
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Insurance companies consider a variety of factors when calculating insurance rates, including the driver’s age, driving record, type of car and a slew of other factors, but the driver’s location is often the starting point. Insurance companies put zip codes into different risk categories based on the number and severity of claims within the area. This is called a “territorial rating,” and it’s used in most states to calculate rates.
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However, it doesn’t take a dramatic move to impact what you’ll get charged for car insurance. For example, moving from zip code 48240 to 48227, premiums rise by $2,365 (106%). The areas are less than five miles apart: one is in Detroit (48227) while the other is in Redford Township (48240), a small suburb that borders Detroit. The territorial rating system allows for anomalies like that.
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“In auto insurance terms, among the least expensive moves you can make is from Atlantic City, New Jersey to Las Vegas. Our data show an increase of three pennies for that,” said Michelle Megna, managing editor of CarInsurance.com.
The site suggests comparison owners shop insurance rates to save some money when moving: regardless of how far the relocation.