Because crime statistics are related to postal routes

I just called my provider of auto and homeowners insurance to ask why my auto insurance went up by 50%. I was told that this was because I had moved. When I inquired more specifically, the underwriter told me that moving from my previous ZIP code to my current one caused the change.

OK, we can debate the merits of even basing auto insurance on local vehicular crime rates -- something the car owner cannot control -- another time, but what I want to know is how it possibly makes sense to use ZIP codes to determine this. A ZIP code is something determined by the postal service based on how they sort the mail.

My ZIP code is geographically pretty large, given that there aren't any major corporations receiving a high volume of mail within the ZIP code, so it's made up of a large number of residences and small businesses. It's also not a very dense neighborhood for an urban one -- no highrises or anything. So, my ZIP code includes a couple of areas fairly far from my home where there are vacant lots and abandoned vehicles. It also includes some rather large housing developments, where there is unfortunately a lot of petty crime. So, I don't doubt that I live in a ZIP code with a fairly high rate of vandalism to vehicles.

However, my particular precinct does not have a high rate of any sort of crime. My precinct -- which was determined by the city by grouping together properties with similar needs in terms of city services, not determined by the postal service according to efficient means of delivering mail -- is a leafy residential neighborhood of one, two, and three-family homes with small yards. I really don't worry about anyone damaging my car there. It would make much more sense for the insurance company to use my ward and precinct to determine the crime rate of where I actually park my car.

Another thing I wonder; how did they actually get statistics regarding crime rate by ZIP code? I can easily find the statistics by precinct, but I can't find a compilation by ZIP code. Do the insurance underwriters actually do some sort of sampling of ZIP codes found in police reports? Or did they just choose a precinct in the ZIP code at random? Or use the highest one?


Jodie said...

It's because most of the state is made up of towns, not cities. For example, my insurance is based on living in a zip code within the Town of Bourne, not the Village of Buzzards Bay. Same when I lived in the village of Marstons Mills within the Town of Barnstable, or the Village of East Falmouth in the Town of Falmouth. It's an average of the accident/crime rate over each town (in towns, anyways). In Hyannis, which is in the same town as Marstons Mills, there are far more accidents than there are in the rest of the town. It's unlikely that I'm only going to drive my car in the 5 mile radius of Marstons MIlls exclusively; therefore, the accidents for the whole town are taken into account. Conversely, people who live in Hyannis aren't taking the brunt of the insurance rates for the entire town.

Basing on precints/wards would also be more difficult because they are not static. In Marstons Mills, my precint changed several times in a short period of time because of the population growth; the zip code remained the same. If there were need for a change in the way that the post office handles mail for Marstons Mills, they change the 9 digit code, not the static 5 digit code.

Besides, you're giving far too much credit to the City of Boston- they base your preceint/ward on your street and house number, not collectivist thought. If people who commit lots of crimes or get into lots of accidents move into your neighborhood, you're still going to be in same preceint. It's not going to change just because the people at the end of the street don't have the same needs as you.

EEK said...

I think auto insurers use a big wheel, like on "Wheel of Fortune," to determine rates. It's much like how airlines calculate fares.

It might be wise to get some auto insurance quotes from other places just to see if their wheel favors you more than the wheel of your current insurance company.

eeka said...

Insurance rates are regulated by the state here. There isn't competition.

Bruce said...

Great system, eh?

You could live in a "high-risk" zip-code, keep your car locked up in a garage there when not in use, and park it out in the open when you get to your job in a "safe" zip code.

Yet, the insurance carrier will tell you your car is at a greater risk for vandalism while it's locked in the garage - and make you pay for it.

And, yes, as long as the state controls the insurance rates, you can expect very little to change.

eeka said...

Right, Bruce. I didn't even get into it here, but I really think insurance rates should be more dependent on the actual actions of the driver/owner. I especially say this having worked at an *shudder* insurance company. There's definitely enough idiocy out there to pay for the rest of us. Don't get me wrong; I'm absolutely not one of those people who thinks people's insurance should skyrocket for one accident or ticket, because people make mistakes. I totally think that car maintenance should play into it. One thought I've had is a policy that, say, you get into an accident or get a ticket, your car is immediately taken to an inspection place. If you have underinflated tires or worn brakes or a package shelf covered in stuff blocking your view, your insurance goes up bigtime. And yes, they should totally have people fill out a form outlining where they drive and park on a regular basis. How frequently you drive for more than a couple hours without a break (something that's proven to increase accidents), how many days a week you drive, where your car actually spends time (parked and moving), and so forth.

Jodie said...

They do offer a lower rate for people who are low-malage drivers. I used to get that rate when I was in high school.

Also, since you own your car outright, you can drop the theft insurance if that would help with your rate. That's not complusory unless you have a loan on your car.

eeka said...

It's a good thought, but I already have the low-mileage discount. My insurance still went up by 50% when I'm not doing anything remotely different with my car. In fact, it's no longer getting the antennas and the stickers ripped off or getting puked on.

Bruce said...

Just don't fall for AG Reilly's cheap vote-fishin ploy to ask the state to authorize a massive reduction in insurance rates for Bay State drivers.

That which the the state giveth, the state taketh away.

The only solution is to abandon the current system, and allow the free market to set the rates.

When in doubt, get the government out.

EEK said...

You can also take the EEK approach and own enough vehicles to get the multi-car discount. :-)

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