Where You Live Affects Car Insurance Quotes
Have you noticed that all online tools providing car insurance quotes start out by
asking your ZIP code? There are several reasons behind this which we'll talk about in this article. Suffice it to say that providing a false ZIP code to get a better rate is not going to do anything when you eventually sign up for a policy. The Zip code where you live is the one that makes the difference, and it is the one that will most likely be used in determining your rates.State Laws Differ
Perhaps the main reason why you are asked your ZIP code when searching for car insurance quotes lies in the fact that car insurance is a matter of state law rather than federal law. In addition, state laws vary in terms of the minimum amounts of coverage they require different drivers. These differences in state law account for some of the differences in premium rates. For example, New York has higher minimums than some other states so you would expect to pay slightly more if you live there.
In addition, states do add various fees and surcharges to your policy which figure into the overall price. In order to be accurate in their quotes car insurance companies need to know where you live so they can figure in those fees and surcharges. Without that information they would not be able to include those costs in your quote. You, in turn, would probably be unhappy when your final price is higher than your quote, after these extra fees and surcharges have to be added in.
State Licenses
Another reason for entering your zip code when searching for car insurance quotes is the fact that not all insurance companies are licensed to do business in every state. Believe it or not, you can't simply set up a car insurance company on Monday and be selling insurance in every state on Tuesday. Car insurance companies have to go through a specific licensing procedure in order to be granted permission to sell insurance in a given state. You enter your ZIP code because it's a waste of time for an automated quote tool to present you with quotes from companies that don't do business in your state.
Population Density
Taking your ZIP code down to the specific locale where you live allows the insurance companies to determine the population density of the area. This is important to them based on the statistical fact that areas with higher population densities also produce more accident claims. It stands to reason when you think about. If you're driving in downtown Los Angeles you are much more likely to have an accident than someone driving through a small town with just 500 residents. Your ZIP code is the quickest way to provide this type of information to the insurance company.
Along with population density comes the risk of theft as well. If you are carrying comprehensive insurance that covers theft, your car insurance company wants to know where you live so they can take into account theft rates. Car insurance quotes for cities like Houston are slightly higher because they have one of the highest theft rates in the nation. On the other hand, theft is not a big issue in Enid, Oklahoma, so you would conceivably pay less for comprehensive coverage.
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