10 Reasons Why Insurance Costs Are Higher in Some ZIP Codes

While it’s true that ZIP codes don’t always mean as much in today’s world as they did decades ago, there are still undeniable correlations between the neighborhoods in which you live and the type of insurance you get. A number of factors can lead to higher insurance costs in some areas, including the following. This list offers some insights into why the cost of insurance may be different for those living in one neighborhood versus another. If you want to learn more about this, read on to learn 10 reasons why insurance costs are higher in some ZIP codes.

1) Car Insurance Rates

The type of car you drive, your driving record and many other factors all play a role in determining how much you’ll pay for auto insurance. Your credit score is also considered when insurers calculate premiums. A 2015 study from ValuePenguin found that drivers with high credit scores are charged less than those with low scores.

2) Life insurance rates

Where you live can have a big impact on how much life insurance you’ll pay, according to WalletHub’s latest report, which ranks 2018’s Best & Worst States for Life Insurance Rates. The financial information website compared all 50 states and across each of their 2,500-plus counties and found that average annual premiums can vary by more than $4,000—from as low as $1,200 per year to over $5,700 per year.

3) Health insurance rates

Health insurance costs differ by location, and a new study released by HealthPocket suggests that these variations are largely attributable to underlying factors—like an area’s average income, age and density. The study found that there is actually very little correlation between health care costs and health status; according to their findings, healthy areas can have higher or lower costs than unhealthy ones. Here are 10 of HealthPocket’s findings: 1.

4) Homeowners Rates

One of biggest reasons why insurance costs are higher in some neighborhoods is because homeowners insurance rates are based on a home’s location and condition. According to data provided by Esurance, these two factors account for about 76 percent of risk when it comes to insuring a property. So what does that mean for your personal insurance bill?

5) Renters Rates

When insurance companies set premiums, they analyze a huge number of variables. One big one? The rate of claims—both filed and closed—in any given area. If your neighborhood has a history of high losses, then you can expect to pay higher rates for coverage there. However, all is not lost: If you live in an area with fewer claims than average, you could qualify for discounts on your rates.

6) House fire rate comparison across the US by county

There are over 23,000 community water systems across America and all have different management styles. That’s why there is no simple answer as to why certain communities cost more or less to insure. Instead, when it comes to high insurance rates, you need to look at a variety of factors: your neighbors (we’re looking at you next door), your local infrastructure and natural disasters that have impacted your area. But we want you to think about something else.

7) Flood risk across the US by county

Flood maps, which are maintained by FEMA and local governments, can give you a good idea of your property’s flood risk. Just like a home is more valuable if it’s located on a well-trafficked street with good schools, it can be less risky to live in a property that falls outside of 100-year flood plain. Look up your neighborhood on FEMA’s map; if it’s within flood plains, ask your insurer what they charge homeowners who live there.

8) Natural hazard risk across the US by county

Natural hazards, such as hurricanes and wildfires, vary significantly by location. Geologic conditions and land use (including neighborhood development density) influence where natural hazards are likely to occur, which types of buildings may be damaged or destroyed by them, and how people’s lives and property may be affected.

9) Tornado risk across the US by county

Tornadoes are incredibly devastating, but are also quite unpredictable. Tornadoes form and travel fast, giving little or no warning of their presence, which makes them a dangerous event for families to prepare for. While tornadoes can be devastating anywhere they strike, certain areas of the US see more tornadoes than others—and some locations have higher risks than others. To find out if your home is at risk, check out Zillow’s map of tornado risk across America (look for dark red spots).

10) Earthquake risk across the US by county

The ability to calculate a home’s earthquake risk is an important part of what informs insurance rates. California and Alaska are particularly prone to earthquakes, but they account for only a portion of states with high quake probabilities. That’s because risks vary from state to state based on factors like active fault lines, distance from prior quakes and soil makeup.


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