Mathew B. Sims is Editor-in-Chief and has authored, edited, and contributed to several books. He has been working in the insurance industry ensuring content is accurate for consumers who are searching for the best policies and rates. He has also been featured on sites like UpJourney.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years (BBB A+). He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com and Safeco. He reviews content, ensuring that exis...

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Apr 23, 2020

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Things to Remember...

  • Depending on which category of customer you fall, you may get penalized with higher premiums or be rewarded with discounted rates
  • If you have a job that’s far from home, you will pay a higher rate than somebody who commutes only 10 miles a day to their job
  • Auto insurance rates vary state by state, and city by city. The more expensive premiums are usually found in the city and the less expensive ones in the more rural geographies
  • If you get one ticket or moving violation fine on your driving record, your car insurance provider will likely penalize you in the form of a surcharge, or premium increase
  • Depending on your state of residence, your insurance company might also charge you if the other driver in an accident is at fault, but doesn’t have insurance

While it’s true that auto insurance exists to protect consumers from having to pay the full bill for auto accidents and the resulting damages and medical injuries, auto insurance companies are in the business to make a profit.

To do that, they set rules and limits based on their average insured customer. Depending on which category of customer you fall, you may get penalized with higher premiums or be rewarded with discounted rates.

If you have a job that’s far from home, you will pay a higher rate than somebody who commutes only 10 miles a day to their job. Or, if your job forces you to park in unsafe areas or work during the overnight hours, your insurance provider may increase your premium.

This is because your job puts your vehicle at a higher risk for car theft or damage, and the car insurance company needs to protect itself financially against a possible future claim.

If you think your insurance company is charging you too much, use our FREE online tool to compare rates now!

Why should I get penalized on my auto insurance because of where I live?

Auto insurance rates vary state by state, and city by city. The more expensive premiums are usually found in the city and the less expensive ones in the more rural geographies.

Because cities and suburbs are more densely populated than rural areas, more accidents, vandalism, and thefts happen there. As the saying goes, you pay for what you get, and a higher claims risk translates into higher premiums for you.

So driving into Boston daily is a much higher risk than driving through rural Montana.

Insurance companies will ask for the zip code of the location your car is parked in at night, and even if it’s kept in a garage or out on a street or driveway. They use your zip code information to look up auto theft rates and determine if you’re keeping your car in a high-risk area.

Additional risks of living and driving in the city include more traffic, more aggressive drivers, a greater risk of fraud, and more uninsured drivers on the roads.

All of these factors cost the insurance companies money. They have to account and prepare for not only more collisions and damage payouts, but also for false insurance claims.

Uninsured drivers are a bigger problem in cities, so premiums are increased to protect against them, too. Insurance companies use extensive data and surveys to determine risk levels across every geographic area that they insure, and charge you rates according to the risk.

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Free Auto Insurance Comparison

Enter your ZIP code below to view companies that have cheap auto insurance rates.

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Will I be penalized by the insurance companies for the type of car I drive?

If a car will be expensive to either replace or repair, the car insurance companies will charge more to insure it. Therefore, cars that frequently make the list of most stolen vehicles will be more expensive to insure, as will high-end cars and cars with a lot of horsepower.

New cars are also typically more expensive to insure.

Insurance providers find that these fast cars tend to get into more accidents, while popular cars tend to get vandalized for parts or just stolen entirely.

A smaller car won’t necessarily be less expensive to insure either. The Insurance Institute for Highway Safety found that the drivers of small cars, thinking that they’re “zippier” and more maneuverable, drive them more recklessly and get into more accidents.

The least expensive types of cars to insure include mid-size sedans and family cars such as SUVs and minivans.

For what other types of penalties do car insurance companies charge?

If you get one ticket or moving violation fine on your driving record, your car insurance provider will likely penalize you in the form of a surcharge, or premium increase. Parking tickets don’t usually result in an increased premium, and they don’t result in points on your license.

Your premium will increase if you’re involved in an accident where you’re found to be at fault, and it will also go up if anybody else on your policy (your spouse, your child, etc.) causes an accident.

Depending on your state of residence, your insurance company might also charge you if the other driver in an accident is at fault, but doesn’t have insurance.

If it’s legal in your state, the insurance company will pay your claim but then raise your rates to try to recoup their losses.

Is it time to change auto insurance companies? Start your shopping here by entering your zip code below to get insurance quotes now!

References:

  1. https://www.statefarm.com/simple-insights/saving/these-7-factors-determine-car-insurance-premiums
  2. https://www.geico.com/claims/after-theft/
  3. https://www.thestreet.com/story/12926858/1/here-are-the-13-most-expensive-cities-for-car-insurance.html
  4. http://www.iii.org/fact-statistic/uninsured-motorists
  5. http://www.iihs.org/