Reader’s Question:

My sister and I are comparing premium rates given that we almost have the same coverage. I live in the city and it seems that I’m paying more on my auto insurance policy than her. Does location greatly affects our premium rates?

Michelle

Los Angeles CA

Your car insurance premium rate is calculated based on the probability of risk associated to a specific event or accident happening. Location does affect your premium rate. Your area is being evaluated based on statistics as to whether it is a high risk and/or known to have higher incidence of car accidents or car being stolen. So from where you live right now, if there’s a notable higher incidence of accidents and vandalism, then your insurance rate will surely going to cost more than your sister.

Another factor could also be living in the urban which statistically shows higher rate of damaged cars as compared to rural areas.

You need to understand that there are other numerable factors to consider when estimating your auto premium rates. How often you drive your car would also be a factor. Drivers who work long commuting road and who drive during weekdays than weekends are most likely to pay more on insurance rates. Other than location, it could be your differences in age, sex, marital status, and driving record are contributing factors to differences in auto insurance rates.