Why your garaging address matters? Zip code impacts insurance rates more than you think…

Why your garaging address matters? Zip code impacts insurance rates more than you think…

August 26, 2019

Garaging Address, this is a term most people don't pay attention to in their auto insurance, but it actually can have a pretty significant impact on your insurance premiums.

To start, what is your garaging address? It's simple, it's the physical location where your car or cars are parked the majority of the time. For most people this is the primary location where they live. We use the word primary because some people have multiple homes so our general rule of thumb is your garaging address is the home you spend the most time at.

Now that we are through the definition, there is a reason the garaging address is so important on your auto policy. Garaging addresses, or more specifically your garaging zip code does have an impact on your insurance premium. The majority of insurance carriers are moving to a rating system that provides premiums based on your zip code. This can be very beneficial overall, but can also create issues if you are changing zip codes.

For examples, in Colorado insurance carriers are very specific about providing rates based on zip codes. On primary factor that they take into account is the frequency and severity of hail in a zip code. Based on historical information, the less likely a certain zip code is to get hail storms the better priced that zip code's premiums will be. On the flip side, if a zip code is known to get frequent and severe hail storms they are more likely to have higher insurance premiums in that zip code.

We experience situations very frequently where a customer is moving from one zip code to the other and once they update their garaging address their premium changes solely because of the address change.

While many people feel that rating based on zip code is too specific and unfair, it's actually not. So often people feel like they are having to pay for claims they don't file. Rating on zip code makes it much easier to assign higher premiums to people that are filing more frequent claims and assign lower premiums to people are aren't filing claims as frequently.

It's important that people keep this in mind when updating their insurance. Having the knowledge allows you to know what's going on behind the scenes if your rate changes after an address update. Stay informed!