An Op-Ed piece out of the San Francisco Bay Area asks that insurance rates be fair to all. The piece is premised on a Consumers Union study that found that insurance rates change by zip code. That is probably not a shock to anyone.
This should not be a news flash to anyone: rates change based on zip code. And for those of you who have not figured this out yet, I am not the biggest fan of insurance companies and how they operate. That being said, I think they are right to charge based on zip codes.
Why? Your zip code tells you a lot about a person. For example, in certain zip codes, you are more likely to be struck by an uninsured motorist. If that is true, shouldn’t your uninsured motorist coverage cost you more? In other zip codes, your car is more likely to be stolen. Shouldn’t your comprehensive coverage cost you more? In some zip codes, there may be only 10 drivers. Okay, there will be more than 10 drivers. But, if there are fewer drivers, than there are fewer chances for an accident. So, your collision and liability coverages should cost you less. One more example: in some areas, like San Francisco, the repair costs to a vehicle are more than they are in other places, like Pioneer. Based on this, shouldn’t your collision coverage cost you more since the insurance company will have to pay more to fix your car?
Look, the insurance companies make a ton of mistakes. There is plenty to pick on. But, for now, rating is not one of them.