How Much Can Location Affect My Alabama Auto Insurance Quotes?

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Just like every other state in the nation, Alabama allows car insurance companies to take into account where a person typically garages his or her vehicle when they decide how much to charge for coverage. And a sample rate comparison provided by state regulators shows that the place where a policyholder lives can have a significant impact on annual premium size.

According to that Alabama auto insurance comparison, rates for the same driver could vary by as little as 0.3 percent to as much as 43 percent depending on company and location. In the most extreme case listed in the comparison, one insurer quoted a 30-year-old married male who drives a 2006 Toyota Camry and lives in Bay Minette $1,674 in annual premiums; but when the location was changed to Huntsville, the quote dropped down to $1,172—a difference of $500 a year.

Out of the 12 areas and 17 insurers used in the rate comparison, Dothan had the lowest average premium in Alabama, coming in at $928. On the other hand, Mobile had the highest average annual premium with $1,069.

Location Matters

The location where a person garages his or her vehicle has proved to be one of the most accurate indicators of how likely a policyholder is to file a claim, according to a report put together by the Connecticut Office of Legislative Research.

Insurers typically evaluate the claims history of a policyholder’s surrounding area and use that to determine how to adjust rates.

Generally, drivers in urban areas get charged more for car insurance. Compared with rural areas, urban areas tend to have more drivers per square mile and attract commuters from outside the area, and this often results in greater traffic congestion, more accidents and a higher amount of claims.

Urban areas also tend to have higher crime rates, which means that insurers may have to spend more to cover claims filed under comprehensive insurance—which covers theft—and need to make that up in the form of extra premiums.

Comparison Shopping Can Minimize Effects of Location

To be sure, location does play a significant part in how much a policy will cost, but drivers in areas with bad claims history can still find prices close to those in other parts of the state with a little Alabama car insurance comparison shopping.

For instance, the 30-year-old mentioned above was quoted $500 more for coverage from the same company if he lived in Bay Minette instead of Huntsville. But for other companies, the premium difference between those two areas was as low as $5 a year.