W
ith home prices hitting record lows many people may be thinking about relocating to a new neighborhood or city. However, what they may not realize is that where an individual lives may directly affect their auto insurance rates.
Cities are becoming increasingly congested and the number of cars per square mile is growing significantly. More vehicles typically means a higher number of accidents and stiffer car insurance premiums. Losses also tend to be higher in urban areas, which leads to higher auto insurance quotes, according to the Insurance Information Institute.
Rural and less populated areas typically have lower insurance costs because there tend to be fewer accidents. So drivers moving from a rural area to a more urban city may see rates rise, and can even plan for this change by getting auto insurance quotes before they move.
Motor City motorists have options
However, some urban areas have taken steps to reduce local car insurance quotes. Detroit currently has the highest insurance rates in the country and operates under a no-fault system. Legislators there have proposed a bill that would allow insurance companies to offer a low-cost policy to good drivers with an income of no more than three times the poverty level and a car worth less than $20,000, the source reports.
Over the years other attempts to lower auto insurance costs in the Motor City have been thwarted. Some say the difficulty residents face in trying to comply with the mandatory coverage laws could only be lowered if higher premiums were implemented in other parts of the state.
Other low cost policies
Nevada lawmakers recently passed a bill that created a low cost auto insurance program for drivers who are at or below 250 percent of the federal poverty line, according to the Insurance Journal. To qualify, a household’s annual income would be around $27,000, according to the Department of Health and Human Services. That level would be raised by approximately $9,500 for additional household members.
The Nevada plan would be funded by a $1 assessment on all drivers who are already insured. Applicants to the program would also have to be 19 or older, have at least three years of driving experience and make less than $20,000 a year.
California has a similar low cost auto insurance program which was extended for an additional five years last September, according to the source. The program will also be extended to more rural areas and allow drivers to find participating insurance companies over the phone, instead of waiting for the results in the mail, according to the III.