- Personal Finance
- Insurance
Some offers on this page are from advertisers who pay us, which may affect which products we write about, but not our recommendations. See our Advertiser Disclosure.
Your ZIP code affects car insurance because insurers use it to measure risk in your area. Accident rates, theft, vandalism, and severe weather damage vary by location, so car insurance companies analyze local claims data when calculating how much you’ll pay for a policy.
In most states, living in a higher-risk ZIP code, such as one in a traffic-ridden city or a high-crime area, can drive up your car insurance costs. Everywhere else, location still matters, and understanding how can help when shopping for a policy.
Learn more: How does car insurance work? The basics explained.
What is a garaging address?
Your “garaging address” auto insurers ask for is simply the primary place where you keep your car parked most of the time. This is typically where it’s parked overnight, even if it’s not technically a garage.
Insurance companies use the ZIP code of your car’s garaging address as a rating factor when determining your premium. When buying a new policy, an insurer might require some proof of the garaging address, such as a utility bill or a recent pay stub with the address on it.
How insurance companies use ZIP codes
Auto insurance underwriters use claims data associated with your ZIP code to help determine the risk of insuring your vehicle. The exceptions are California and Michigan, which prohibit auto insurers from using ZIP codes as a rating factor.
Some of the factors that can affect risk by location include:
-
Population density
-
Traffic patterns
-
Road conditions
-
Natural disasters
-
Crime rates and vandalism
-
The portion of drivers who are uninsured
-
Cost of living
-
Claims history
Learn more: How your vehicle’s make and model affect car insurance costs
8 risk factors for car insurance that vary by location
Here’s a deeper dive into some of the factors that typically affect the cost of car insurance within a ZIP code.
1. Population density
More people living in an area generally leads to more cars on the road, more traffic congestion, and higher accident rates. Auto insurance policies tend to be more expensive in high-density areas as a result.
2. Traffic patterns
Roads favored by speeders, roads with visibility issues, complicated intersections, and unclear signage can all lead to higher numbers of traffic accidents and claims.
3. Road conditions
Road conditions can also affect auto insurance claims. Roads with potholes, rough surfaces, and debris can end up damaging vehicles and causing car accidents.
Streets that flood easily during rain and roads that quickly turn icy in frigid temperatures are also hazardous and may lead to more accidents and vehicle damage.
4. Natural disasters
Living in regions prone to natural disasters can increase insurance costs because insurance companies typically have to pay out more money in claims following these events. Due to past claims, drivers in these areas typically have to pay more for auto insurance.
Learn more: Does car insurance cover flood damage?
5. Crime rates and vandalism
Car insurance rates are generally higher in ZIP codes with high crime rates because of the higher auto theft and vandalism claims.
Learn more: What happens when your car is stolen?
6. Portion of uninsured motorists
If your ZIP code tends to have more uninsured motorists on the roads, you can probably expect to pay more for an auto policy. A higher number of uninsured drivers increases the likelihood of claims under collision insurance coverage and uninsured motorist insurance.
7. Cost of living
Cost of living can have an impact on your auto insurance premiums. Expensive ZIP codes can have higher costs for local vehicle repair. The cost of medical care might also be higher than average.
Insurance companies footing your repair bills and doctors’ bills can expect to pay more when claims are filed from customers in high-cost-of-living areas.
8. Claims history
Insurers review their own internal data to see the number of claims in your ZIP code. If there are frequent claims in your area, which may be due to some of the risks we mentioned above, your rates will often be higher to offset potential future claims.
Learn more: How to file a car insurance claim
How your state impacts your car insurance coverage
Your auto insurance premiums are also affected by state laws that set minimum coverage requirements and mandate additional coverage beyond liability insurance.
For example, drivers in Texas are required to have liability insurance that covers $30,000 per person for injuries, $60,000 total for all injuries, and $25,000 for property damage per accident (written by insurers as 30/60/25).
More coverage typically means higher car insurance costs for the driver.
Additionally, some states — including Florida, Massachusetts, Michigan, New Jersey, and New York — require a minimum amount of personal injury protection insurance (PIP), which pays your medical bills regardless of who was at fault for the accident. Rates tend to be higher in no-fault car insurance states than in other states.
For example, as of Jan. 1, 2026, New Jersey will require a standard auto policy includes liability insurance of $35,000 per person for injuries, $70,000 total for all injuries, and $25,000 for property damage per accident (written as 35/70/25), uninsured motorist coverage in matching amounts (35/70/25) and PIP of $15,000.
Other factors that affect car insurance rates
Where you live is not the only factor that car insurance companies evaluate when setting insurance rates. Your vehicle type, driving history, age, and even your credit may be used.
Driving record and accident history
Car insurers view drivers who have no car accidents, DUIs, speeding tickets, or other infractions on their records as less risky to insure. Less risk equals lower rates.
Learn more: What’s on my driving record and how to find it
Credit
Studies have shown a correlation between credit and the probability of filing car insurance claims. Data shows drivers with excellent credit — known as credit-based insurance scores — tend to file fewer car insurance claims. Only California, Hawaii, Massachusetts, and Michigan ban the use of credit in auto insurance rates.
Learn more: How credit history impacts car insurance rates – for better or worse
Vehicle type
The costlier your car is to repair or replace, the harder it will be to find cheap car insurance if you’re buying full coverage. A full coverage policy includes comprehensive insurance and collision insurance, which provides coverage for your car if you’re in an accident, your car is stolen, vandalized or damaged from other events, such as severe weather, falling objects, or striking an animal.
Learn more: Liability-only vs. full coverage car insurance: Which is better for you?
Vehicle usage
You’ll typically pay less if you don’t drive your car much compared to others who have long commutes. That’s why insurers ask about annual mileage when you buy a policy.
Learn more: How does pay-per-mile car insurance work?
Tips for finding cheap car insurance in your ZIP code
While you can’t control traffic, crime, and other things that drive up rates in your ZIP code, you can take steps to get the best deal possible where you live.
1. Maintain stellar driving habits
Practice safe driving as much as possible to avoid car accidents, so you can build up a history of no insurance claims. In many states, if you’re age 55 or older, taking a defensive driving course can get you a car insurance discount.
Learn more: How to earn a defensive driving discount
2. Improve your credit
Insurance companies correlate good credit with the likelihood that you’ll file fewer auto insurance claims. Build a good credit history by paying bills on time and paying down debt.
Learn more: 10 tips to improve your credit score
3. Compare car insurance quotes from multiple companies
Always get quotes from multiple car insurance companies, so you can consider your options and nail down the best deal. Because insurers have their own formulas for calculating rates, comparing quotes is the best method for finding the cheapest rates in your ZIP code.
Learn more: How to shop for car insurance
4. Ask about available discounts
Many car insurance discounts are applied automatically, like bundling your auto and homeowners insurance and being a good driver without claims. Ask about other discounts you might be able to get, like enrolling in paperless billing or auto-pay.
5. Re-evaluate your coverage needs
If you have an older, paid-off vehicle and enough savings to cover repairs or the cost of buying another car if yours is totaled, you might not need full coverage car insurance. Assess your situation to determine the coverage types you currently need.
6. Adjust your deductible amount
Your car insurance deductible — the amount of money deducted from a claims check if you make a collision or comprehensive insurance claim — affects the cost of your insurance premiums. Generally, if you opt for a higher deductible, you’ll pay a lower premium. However, you need to be prepared to cough up this amount if your vehicle is stolen or damaged.
Learn more: Cheapest car insurance in the U.S.
How ZIP code affects car insurance FAQs
Does car insurance depend on ZIP code?
Yes, in most states, insurance companies use your ZIP code along with other factors to help set car insurance rates. You could pay a higher or lower price just by moving to a different ZIP code nearby. If you are thinking of moving, compare car insurance rates by ZIP code to find the area with the lowest rates.
Why is my ZIP code important for car insurance?
Insurance companies care about ZIP codes because they track claims by location, including accident rates, weather-related claims, and vehicle theft claims. They set different rates by ZIP code to account for these risks and ensure they are pricing policies correctly.
Learn more: How and why extreme weather is increasing the cost of your car insurance
What’s the biggest factor that impacts your auto insurance rate?
Generally, your driving record, age, location, and vehicle can have the most impact on how much you pay for coverage. Credit can also be a large factor, depending on the insurer, in states where it’s allowed.
Tim Manni and Amy Danise edited this article.
Read more
How does car insurance work? The basics explained.
Learn more about how car insurance works, including what it covers, what it costs, and different types of auto insurance coverage.
12 things your car insurance doesn’t cover
Here are some situations that aren’t covered by standard car insurance policies and how you can make better decisions on your insurance coverage.
How your vehicle’s make and model affect car insurance costs
The make and model of your vehicle can make a big difference in how much you’ll pay for auto insurance, along with being married vs. single, ZIP code, credit score, a DUI, gender, causing accidents, being designated as a “risky driver,” and driving an EV.
Cheapest car insurance in New York 2025
Find out how to get cheap car insurance in New York, including cost comparisons among insurers and smart ways to lower your auto insurance bill.
What is a car insurance premium, and how is it calculated?
Learn what a car insurance premium is, how it's calculated, and factors that affect your rate. Plus, get some tips to help you save on coverage.
Cheapest car insurance for good drivers
You need car insurance, even if you have a clean driving record. The good news: you’ll pay less for driving safely. Compare quotes to find the cheapest rates.
