How do auto insurance providers calculate your payments?

Question

I just got off the phone with my auto insurance to change my address. They informed me that my rate is going to be $16 more now because I moved to a different zip code. The problem is, I had previously had my insurance changed because it skyrocketed after my previous move. Which is strange because I had moved from the same city before and it went down about $20. I have since moved BACK to the SAME city I was in before and it's going up again?? This makes NO SENSE! I thought it was based off of your location (zip code). But now I just think these insurance companies are making up their own numbers and rules and we're all getting screwed!! Can someone please explain this insanity to me? My zip code is now and was before, 95608. The zip code I just moved from is 95628. Yes, I have moved back and forth 4 times within the same 2 cities if you're confused.

Answer 1

Rates do change periodically, so maybe there was a rate change between moves that is making the premium higher than it was before within the same zip code.  

Answer 2

If I'm correct by your explanation, you had one insurance company at zip code 95608. When you moved to 95628 the rate rose, and switched to another insurance company. Now that you moved back to 95608 the rate rose yet again?

If this is correct then all I can tell you is insurance companies are weird. Certain companies will be cheaper in certain zip codes than others. So the company that you ended up switching to may have a higher rate for the new zip code than the previous company that you had before. Insurance companies review each zip code to see how many accidents occured there and how many claims were filed there within their company. Based on that information, they will re-rate or stick with the premium. These revisions have to be approved by the California Department of Insurance .

The same applies in other aspects. For example, Company A is cheaper than Company B for younger drivers, but Company B is cheaper than Company A for older drivers. Companies specialize in certain things that other companies don't.

Hopefully this helps

EDIT: See my second paragraph about this. Anchor General may have cheaper rates in 95628 then in 95608 while Progressive is the opposite. It's the way each insurance company calculates. Every insurance company has different ways to calculate their premiums. Overall, they look at the losses (accidents, thefts, etc) that incurred in each zip code. I don't know how else to explain it.

Answer 3

There are a lot of factors.  The car you drive, your driving record, crime in your neighborhood, the poplulation of the town/city your are living in, the amount of registered cars in your city.  All of these things contribute to the likelihood of you filing an insurance claim.  Essentially the insurance company uses complex equations to determine the likelihood of you filing a claim.  And rates are adjusted yearly for inflation and other factors such as changes in population, registered drivers, crime statistics, etc.  It is true however that all insurance companies have different rates and you should shop around to ensure that you are getting the best deal.

Answer 4

Insurance is based off of your credit score, driving record, gender, marital status, zip code, the vehicle you drive, claims history, etc etc etc. Are you sure the only thing that changed is your zip?