family unloading car

It’s a familiar scenario for many people. You move to a new location and bring your car with you. Your driving situation is essentially the same, yet your insurance rates have changed – perhaps significantly.

It’s only logical to wonder why your auto insurance changed when you moved. Depending on where you’ve moved to, your car insurance rates may increase, decrease or stay the same. Here’s why.

Why your auto insurance increases after a move

Whether you’re moving near or far, your insurance rates could change because your ZIP code is a factor auto insurers use when setting their rates. Even a short move across town could result in higher premiums if the move makes your commute longer. Here are some other reasons why your rates may climb.

  • Rural Areas – Premiums for drivers in rural areas could rise if weather conditions like seasonal tornadoes and more wildlife collisions increase your likelihood of getting into an accident or filing a claim.
  • Larger Cities – Your new locale might have a higher rate of theft, vandalism or other risk factors. This is often the case in cities and densely populated areas. And with higher traffic congestion, accident rates are often higher in more urban areas.
  • Local Cost of Living – Similarly, some areas have a higher cost of living, which could translate to a higher cost of claims. The insurer must then pass on the higher costs of car repairs and medical care after accidents to their policyholders.

New state, new car insurance regulations

Your rates could drastically change if you move to a different state. Remember, every state has its own unique coverage requirements. When you inform your insurer you’re moving, they must cancel your old policy and draft a new one that complies with your new state’s coverage regulations. These requirements may be different and more extensive in your new location, resulting in higher premiums.

As you might imagine, some states and cities have more expensive auto insurance rates than others. For example, Louisiana, New York and Michigan charge the highest auto insurance premiums, according to the Insurance Information Institute (III), so if you move to one of these states – or another state with high insurance costs – your premiums may rise significantly.

Why your auto insurance decreases after a move

For all the reasons for higher insurance rates mentioned in the preceding section, the opposite may be true if your move results in reduced premiums. For example, your premiums could drop if your move resulted in a shorter commute, less exposure to natural disasters or lower rates of theft, vandalism and accidents.

Where you’re moving to can also have a considerable impact on your car insurance rates.

Example: Let’s say you move from Brooklyn, New York, to start a new life in Raleigh, North Carolina. According to data from The Zebra, the move could deliver a whopping $2,397 in premium savings over six months. This is because Brooklyn carries the highest premiums on average for full coverage at $2,977 every six months. By contrast, Raleigh’s average premiums are $580 for a six-month policy – the lowest for a major city.

Moving to a state with cheaper insurance rates, like North Dakota, Maine and Iowa, which have the cheapest rates in the U.S., according to the III, might also lead to premium savings. Kansas and 11 other states require their drivers to carry personal injury protection (PIP) coverage, which covers medical care costs and lost wages for you and your passengers if you’re injured in an accident. By moving to another state that doesn’t require you to carry PIP coverage, you might consider dropping it and pocketing the money. By doing so, you might save 15% to 20% of the cost of your total auto insurance costs, according to Liberty Mutual.

How to notify your car insurance company you’ve moved

Whenever you move, you need to update your auto insurance policy and give your insurer your updated address. While you’re at it, you may wish to compare car insurance rates to see if you can save money. Follow these steps to notify your auto insurer of your new location and potentially save money.

  • Contact your current auto insurer. Let your auto insurance agent or company know you’ve moved as soon as possible. They’ll consider potential risk factors and regulation changes in your new location, which could lead to rates increasing, decreasing or remaining the same.
  • Research your new location’s auto insurance requirements. If you’re moving in-state, your coverage requirements may not change much. But if you’re moving out of state, your coverage may change since auto insurance regulations and requirements vary from state to state. It’s a good idea to evaluate your coverage selections to determine what types of coverage you need and for what amounts. For example, you may need to carry underinsured/uninsured motorist, PIP or medical payment coverage in your new state.
  • Shop and compare car insurance quotes. If your auto insurance carrier doesn’t provide coverage in your area, you’ll need to find a new insurer. Even if they do, you may want to test the market to see how their competitors’ premiums stack up. Reach out to a few other insurance companies to get quotes for similar coverage or use a service like Experian’s car insurance rate comparison tool to compare multiple quotes and find the best value.
  • Purchase a new insurance policy. Once you’ve identified the policy you want, sign up for it and make the first payment.
  • Cancel your old auto insurance policy. If you’re switching carriers, schedule your old policy to cancel on the day or after your new policy begins to prevent a lapse in coverage. If you’ve prepaid your premium, your insurer may refund you for the unused portion. Be aware you may be charged a cancellation fee or a fee equal to 10% of your remaining premium.

Your credit could also affect your auto insurance

Moving to a new location can be exciting, but it can also lead to a change in auto insurance premiums. However, where you live is only one factor auto insurance companies consider when setting their rates. Insurance companies also consider your driving record and usage, vehicle type, coverage options, deductible and other factors.

If you’re moving to a new state, keep in mind most states allow insurance carriers to check your credit-based insurance score when determining your auto insurance premiums. Improving your credit score before looking for a new policy could qualify you for lower rates. Get your Experian credit report and score for free to see where your credit stands and address any issues you discover.