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UPDATED: Mar 13, 2020
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Rural drivers and city drivers face different challenges and risks. The cost of insurance will vary from one individual to the next, but in general, people who live in the country will have lower rates than people who live in a large city. There are many reasons for this, and understanding the specific risks inherent in where you live can help you modify the policy to meet your budget without sacrificing coverages that you need.
Cost of Insurance: Cities vs Rural Areas
Although specific rates vary from one driver to the next, the average cost of premiums is higher in certain areas than others. Detroit, Michigan has the highest annual premiums of any city in the country, with an average cost of over $2,500 per year.
Michigan in general has higher insurance costs than most other states due to some state-specific coverage laws, but other urban areas like New Orleans, Philadelphia, Baltimore and Miami all have premiums that are substantially higher than insurance costs in other areas. The cheapest state for auto insurance is Maine, and some of the most affordable cities nationwide include Wapakoneta, Ohio and Lafayette, Indiana.
As a general rule, larger cities have higher insurance rates than smaller cities, and states that are heavily urbanized will have higher premiums than states with only one or two major metropolitan areas.
Factors Influencing the Cost of Insurance
Insurance companies determine the likelihood of a driver being involved in an accident and calculate premiums based on this risk. Because insurance companies rely heavily on statistical information, risk is higher in areas with high populations. In other words, because there are more people in a big city, more accidents occur each year. This increases a driver’s overall risk. There are several other factors that are unique to city driving that can increase the risk of drivers in those areas:
— Theft rates tend to be higher in big cities
Most vehicles are stolen to be used in other crimes, such as drug trafficking, and incidence of those crimes tends to be highest in large cities, especially those on national borders.
— More Traffic
Rush hour traffic and congested roads are a major contributor to collisions, especially pricy multi-car rear-end accidents. This is especially true if you have a daily commute during peak traffic hours.
— Higher Vandalism
Vandalism is somewhat more frequent in big cities, especially if you live in a neighborhood with a fairly high crime rate. This is a major reason why insurance premiums vary from one postal code to another within a city.
Ways to Reduce the Cost of Your Premiums Wherever You Live
Of course, not all aspects of city driving are safer than those in rural areas. Rural drivers have fewer accidents, but the collisions are more likely to be fatal. This is because single-car collisions are more common on country roads, and the amount of time it takes for emergency services to arrive can often be quite long. Additionally, drunk driving is a major concern in many rural areas. For these reasons, Montana has one of the highest traffic fatality rates per capita of any state.
Nevertheless, despite the risks associated with rural roads, accidents are generally too infrequent to cause a major increase in the cost of auto insurance. As long as you maintain safe driving habits, your rates should stay quite reasonable. Here are a few tips for reducing the cost of your insurance whether you live in the city or the country:
— Install an anti-theft device on your vehicle
— Reduce the amount of commuting you do by using public transportation or car-pooling
— Reduce your overall amount of driving and provide odometer readings if necessary
— Park your vehicle in a garage to protect it from vandalism and weather events
— Take a defensive driving course or other advanced driver’s education course
— Install safety features like backup sensors on your vehicle
— Avoid drinking and driving
— Avoid traffic violations, speeding tickets and other driving infractions
— Focus on buying affordable cars with high safety ratings to get the maximum discount
By focusing on maintaining safe driving habits and reducing your chances of a theft or collision, you can reduce the overall amount of auto insurance premiums that you owe no matter where you live. Be sure to ask your agent if there are any other discount programs that you may qualify for, such as a multi-policy discount or safe-driving discount, that can reduce the overall cost of your insurance even further.