Melrose drivers face relatively low insurance rates

Jul. 8--When it comes to automobile insurance, where you live determines your cost as much as what you drive or how you drive it.

The average American pays $1,470 annually to insure a vehicle. But move to Maine, and that rate will drop by almost half. Motor to Michigan, and it will nearly double -- even if nothing about your vehicle or driving habits changes.

It's not just your state. It's also your ZIP code. Urban dwellers generally pay more for insurance than rural residents, with premiums sometimes tripling when you move from the farm to the city.

A resident of Norwell, for example, saw an average rate of $1,190 in 2018. If he or she moved six miles north to Cohasset, the rate might go up by about 2.6 percent. But if that resident were to move to East Weymouth, the rate increases by more than 23 percent. Move west down Route 3A to Quincy, and the rate would now average $1,549, an increase of 30 percent.

The North Shore is no different. A Reading resident could see rates skyrocket by more than $400 a year after a move just 10 miles down I-93 to Medford.

The same move would cost the average Melrose ratepayer over $200. Melrose's average rate of $1,333, 84th highest in the state, is fairly reasonable relative to the city's immediate neighbors. Stoneham residents pay an average of $1,407, Medford $1,575, Saugus $1,593, and Malden a whopping $1,922, the 17th highest in Massachusetts. Wakefield just edges Melrose at $1,324.

"I think a good number of folks --though certainly still not all -- know that car insurance costs vary by state," said Alyssa Connolly, director of market insights at auto insurance comparison website The Zebra. "However, when they find out it varies by as granular a variable as ZIP code -- and that they could pay a different amount for insurance than their friend two blocks away -- they're frustrated and confused."

The Zebra examined more than 61 million rates across the country for its 2019 State of the Auto Insurance Report and shared some of its data with GateHouse Media.

The numbers reveal vast disparities, with rates tending to be higher the closer you get to an area with high crime rates or increased chance of getting into an accident. Major cities also tend to create more wear and tear on a vehicle, as stop-and-go traffic leads to brake and engine problems over time.

"Rates vary based on how long you've been driving, your driving history, things like that," said Bryan Talanian, of Weymouth-based Ralph Talanian Insurance Agency. "But the biggest factor is proximity to Boston. You see it in most cities. Density is key. Move to a city like Worcester, or Springfield, you'll see it there, too."

In fact, the six priciest ZIP codes in Massachusetts for auto insurance rates are all Boston neighborhoods (with Roxbury being the highest).

Talanian said there are plenty of ways for drivers to get lower rates, such as bundling home and auto coverage, reducing their overall mileage and taking advantage of multi-car discounts. But no matter what, a new address will almost certainly mean a new rate, for better or worse.

"If a family was to move away from the city, they'd see big drops, but a lot of times you might see younger drivers who want to move to Boston for whatever reason, and they see their rates go up by thousands of dollars," Talanian said.

Lisa Derry was in that position. A lifelong Cape Cod resident, she remembers moving one town over from Wellfleet to Eastham and her rate changed by a mere $6. But then she moved to Lynn three years ago, and her rate went from just under $1,000 to well over $2,000.

"You expect certain cost-of-living increases when you move closer to the city, but for some it can be pretty big sticker shock," Derry said. "It might keep some people away from the area, or even flat-out prevent them from moving. It might be the difference between taking that new job, or not."

And it can be harder than you think to predict what those rate changes will be. Connolly said you can get a good sense if you're moving across state lines, because car insurance is regulated at the state level.

"For example, in Massachusetts, gender, credit, education and occupation (among other things) are not allowed in pricing auto insurance, but if a Massachusetts resident were to move to New Jersey, all of that info would now make an impact on their rates," Connolly said. "Different states also experience different weather, have different economies and legislation, and feature different insurance companies doing business there."

Doing your

homework before you move can go a long way, Connolly said.

"Since car insurance varies so much by location, you really have to re-quote in each area," she said. "You can do that before you move so you have a better idea of your options."

Some feel the pinch more than others

Although rates have climbed since 2011, their bite out of the American budget remains about the same. Massachusetts' average rate for 2018 was $1,277, only $23 more than its 2011 average. During that time, average rates climbed as high as $1,541 and dipped as low as $948. Compare that to a state like Colorado, which has seen a steady increase since 2011, during which time average rates have increased by more than 78 percent.

Families still spend an average of 1.5 percent of their annual household income after taxes on auto insurance, according to data from the Bureau of Labor Statistics' Consumer Expenditure Survey.

Anything over 2 percent is considered unaffordable in minority and low-income neighborhoods, according to the U.S. Treasury Department's Federal Insurance Office in a 2017 report.

The report found 18.6 million people living in more than 800 such neighborhoods across the United States -- two-thirds of them clustered in Florida, Michigan, New Jersey, New York and Pennsylvania.

Comparatively, 18 percent of Massachusetts ZIP codes are listed as minority and low-income according to the FIO, but in none of these neighborhoods do residents pay more than 2 percent of their annual household income after taxes on auto insurance.

Michigan especially feels the pinch, with one in seven of its residents falling into this profile. That's because the Great Lake State has the highest car insurance premiums in the nation at an average of $2,693 per vehicle, The Zebra's data show.

Lowest rates, highest limits

Maine residents, meanwhile, enjoy the lowest rates in the nation. They pay an average of just $896 per vehicle.

They also have the fewest uninsured motorists per capita at 4.5 percent. And they live in one of the least auto-populated states with fewer than 1 million registered vehicles on the road, according to Federal Highway Administration statistics.

Yet Maine, along with Alaska, has the highest mandatory minimum bodily injury liability limits in the country -- $50,000 per person and $100,000 per accident. Most states require half that.

"We have some of the lowest rates, yet some of the highest limits," said Dan Bernier, an attorney who represents the Maine Insurance Agents Association. "But because we're cheap, you can have higher limits without spending a lot of money."

Bernier credited several factors for reducing Maine's premiums: It's a largely rural state with a low crime rate; its numerous insurance carriers aggressively compete; and its juries rarely award high damages in auto-related lawsuits.

Compare that to Massachusetts, which has five times as many vehicles in less than one-third the land area, and boasts a major metropolitan region with three times as many people than all of Maine. Bay State residents pay nearly $400 more annually than their northern neighbors.

"When I was single in my 20s and living in Massachusetts, I was paying $1,500 a year for my Pontiac Sunbird," Bernier said. "When I moved back to Maine, I got married and bought a house. And we were paying $1,500 to insure the house and two cars."

Now, he said, he pays about $6,000 annually to insure his home and vehicles. But the family has two additional cars and two additional drivers who are among the costliest ages to insure -- 19 and 21 years old.

"When it was just my wife and I, we were paying a little over $2,000 for all of that --cars and house and umbrella coverage," Bernier said. "Having a kid as the primary driver on a car is very expensive."

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