Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted on Help Smart Phone and MEL Magazine.

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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. 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

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Mar 19, 2020

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The lowdown...

  • Your zip code is requested when insurance companies calculate the cost of your insurance premiums
  • Moving from one zip code to another within the same state can have a significant impact on the cost of insurance
  • Regardless of where you live, you can still find affordable car insurance coverage

Insurance companies have to calculate the cost of insurance premiums using various factors. Your zip code tells the companies more than you might think. Where you live and drive are a major part of what you pay for car insurance.

Enter your zip code above to compare car insurance rates in your neighborhood.

The Zip Code Establishes State Insurance Requirements


When you get car insurance quotes, you are asked to enter your zip code, not your state. This information saves the insurance companies a step because they get to see what state you live in while getting more specific geographic details as well.

The state you live in determines the insurance requirements for a basic policy. Your state will require bodily injury liability and property damage liability.

As for the amounts, this requirement will depend on the state itself. Some states will also require you to have PIP (personal injury protection) or medical payments coverage as well.

Your zip code identifies what your minimum insurance requirements are. When you get quotes, it’s possible to add more coverage, but you will not be able to select less than what your state requires.

In the event that you move, your zip code will be used to determine if you have moved states and if you are a higher or lower risk of being involved in an accident.

The lower the risk you are for the insurance companies spending money on you in a claim, the lower your monthly premiums are likely going to be.

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Crime Rates are Explored

The crime rates where you live are explored. These are categorized by zip code, which is another reason why you are asked for yours. Some of the crimes that could impact the cost of your insurance include:

  • Grand theft auto
  • Burglary
  • Vandalism

If you live in an area where there are a lot of these crimes, you are at a higher risk of being a victim. Insurance companies will take this risk into consideration as they will want to protect their own finances.

If you are a victim of a crime with your car, you will file a claim and it will cost them. Higher crime areas make you a higher risk and that would cost you more on car insurance.

If you then move from a high crime rate area to a low crime rate area, your zip code would be used to verify this. You might then notice your insurance costs drop because of lowering your risk in the eyes of the insurance company.

To get an idea on how the costs can vary, look at two zip codes. You might be considering a move and each address has a different zip code. Get quotes from insurance companies for the same level of coverage but with the different zip codes.

You might notice quite a bit of a difference in the cost of the premiums.

The Number of Accidents in Your Area is a Factor


Even if you are a safe driver who has never been involved in an accident, insurance companies are going to look at the number of accidents in your area.

Your zip code will tell insurance companies about the number of reckless drivers, the number of car accidents, fatalities, and more.

If you live in an area where there are a lot of accidents at intersections, you are at a higher risk of being involved in one of the accidents.

It could cost the insurance company a lot of money if you were to file a claim and therefore they charge you more in order to protect themselves financially.

One of the few ways to reduce the impact of living in an area where there are a lot of accidents is to be a “low mileage” driver. This is when you don’t have a long commute or only use your vehicle recreationally.

Driving fewer miles means you’re not on the roads as often and therefore lowers your risk of being involved in one of the accidents.

There’s nothing you can do about where you live short of moving. You simply have to be aware that some cities are more costly than others because of traffic congestion and the number of accidents that occur.

What else is used to calculate the cost of insurance premiums besides the zip code?

There are a lot of factors that go into the cost of car insurance. Some of what determines the cost of a policy include:

  • Your driving record
  • Distance you drive
  • Your age and gender
  • The car you drive
  • Where you live

If you take your zip code out of the equation, there are still quite a few factors that go into how insurance policies are calculated. If you can’t change where you live, there are other things you can change in the hopes of saving yourself some money on your premiums.

You might want to look at your driving record and how you can be a safer driver. You might also want to look at the car you drive. Cars with more safety features are going to be less to insure because they make you a lower risk on the road.

The best thing to do is to get quotes from the different insurance companies to see what it’s going to cost to get car insurance. Your zip code is used and in different ways, but it’s not the only thing that’s used.

Your zip code is used and in different ways, but it’s not the only thing that’s used. If you live in an area that is high crime and/or high traffic, you can still get affordable insurance.

Compare car insurance quotes by entering your zip code below.