Why do car insurance companies need to know the postcode of where the car is parked?

Question

Does it make a difference to the insurance premiums if you live in a rich or poor area?

Answer 1

It is more than a difference between a "poor" or "wealthy" neigborhood. It also has to do with loss frequency ( # of accidents and/or claims).
If you live in a densly populated area, there is a greater chance that you will be involved in an accident than if you reside in a rural area (even if it isn't your fault). Insurance companies are in the business of assessing risk. We are all a potential risk (some more than others). Where you live is a factor that is used in the equation...and the result is the premium that you will be charged.
Many folks have figured this out and claim that the live in another area (zip code) so that they can get a cheaper rate.
Be careful though......depending on which state you live in, (and who your insurance company is) if you have a claim and it is discovered that you do not "garage" the car where you say you do, the claim can be denied, or worse yet, you can be prosecuted for Insurance Fraud.......and that is very, verrry nasty thing.

Answer 2

Yes it does! Not so much the income of the area, but the history of the area.

In zip coe 01001 there were 25 cases of cars stolen last year. In 01002, there were 175. Which zip code has the higher incidences of auto theft?

Answer 3

They check the crime rate of the area you live in. If there is a lot of car theft and vandalism where you park the car, your premiums will be higher.

Answer 4

Simple because if you live in an area where there is a lot of crime the rates will go up and it is just the reverse for a different part of your town.

Answer 5

Because a car in New York City is much more likely to be in a collision or get stolen then a car in the countryside.

Answer 6

they will charge more if you park in poor area because you are more likely to get keyed or crashed in to