Zaneta Wood, Ed.S. has over 15 years of experience in research and technical writing bringing a keen understanding of data analysis and information synthesis to reach a wide variety of audiences. She studied adult education and instructional technology at Appalachian State University as well as technical and professional communication at East Carolina University. Zaneta has prepared technical p...

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Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Jo...

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Reviewed by Joel Ohman
Founder & CFP®

UPDATED: May 22, 2020

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It’s all about you. We want to help you make the right coverage choices.

Advertiser Disclosure: We strive to help you make confident insurance decisions. Comparison shopping should be easy. We partner with top insurance providers. This doesn’t influence our content. Our opinions are our own.

Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.

Here's what you need to know...

  • Location plays a major role in determining a person’s car insurance rates
  • A person living in an urban area will pay higher insurance rates than someone living in the country
  • You must understand how your car insurance policy works and how different coverage options can affect you

There are many factors that determine how much someone pays in car insurance because of location and ZIP code. To learn more about the insurance available in your area, go to the National Association of Insurance Commissioner’s website.

Compare car insurance rates today with the FREE online tool by typing in your ZIP code now!

Table of Contents

Which area has higher insurance premiums?

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The most obvious factor is whether the location is urban or rural. Urban areas have a larger population, which means more traffic and a higher percentage of traffic accidents.

The more car accidents in an area equal higher insurance costs since the car insurance providers pay out more in claims because of the higher amount of accidents.

Urban areas are also more likely to have more car thefts and vandalism which make car insurance rates rise.

The weather of a region also greatly affects a person’s car insurance rates. An area that is routinely exposed to harsh weather has more car damage claims than a location with moderate weather.

Oklahoma is an excellent example of a state with varying types of extreme weather that causes car damage. Tornadoes, hail storms, wind storms, and ice storms are very regular in Oklahoma and cause a lot of car damage.

A state that has milder weather would not consider weather as heavily as a factor when considering car insurance rates.

An area with a large emergency services presence would also have lower car insurance rates. More police and paramedics mean a quicker response time for accidents, which can help prevent minor injuries from progressing into major injuries.

A location that has roads that are in better condition will also have lower car insurance rates than an area where roads are not regularly maintained.

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How do lawsuits affect car insurance rates?

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Another factor that people might not consider relevant is how many lawsuits are filed in a given area.

A place that has a higher percentage of car-related lawsuits will cost more in car insurance premiums. Car insurance providers will raise rates to offset the financial burden of having to pay settlements.

An above-average amount of lawsuits is one of the reasons the state of Louisiana tends to have much higher car insurance rates than many other states.

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What are other factors that affect car insurance rates?

A policyholder’s location is very important when determining how much they will pay in car insurance, but there are many other factors that can make higher rates lower or low rates higher.

One of the most important factors is the policyholder’s credit score. In the world today a person needs a good credit score for just about everything. Credit scores affect a consumer’s ability to buy a car or a house, as well as eligibility for any type of loan.

A person’s driving history is another major component in how much they pay for car insurance.

No matter where you live if you have a bad driving record, you will pay more each month. Things like speeding tickets and multiple accidents greatly affect the rate a policyholder will pay.

If the driver has multiple violations or has ever defaulted on payments to a previous car insurance provider they could be classified as a high-risk driver, which would substantially increase their annual car insurance premium.

Other basic factors considered when determining car insurance rates are

  • Age
  • Gender
  • Type of car
  • How much the person drives
  • Whether the person is a homeowner
  • Marital status

A very young or very old driver will always pay more for car insurance. A young driver does not have as much experience on the road, and some older drivers have health issues that play a major factor in their driving ability.

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