December 9, 2005
Living near a church could save drivers some cash. It's part of a new study on auto insurance that could change the way we calculate premiums.
For decades auto insurance rates have been based on a driver’s zip code, but that could soon change.
A new study conducted by a risk assessment firm called Quality Planning has found that zip codes are too broad and Insurance Companies are better off calculating it by streets drivers live on or what they live next to.
The study shows drivers living with in a mile of a church are 10% less likely to crash. But if drivers live near a restaurant there is a 30% higher chance they'll be involved in an accident.
"It makes sense; living near a restaurant you're more likely to get hit by someone who's been drinking," said Andrew McElfresh, a motorist.
The study also found that motorists living near elementary schools get into more crashes than those who live near a liquor store.
"Maybe their looking out for the kids running around and not the other cars," said Steve Tyler.
For whatever reason, it can change drivers’ insurance costs dramatically.
"It can help consumers in terms of lowering their premiums but you have to be careful which group that you're targeting and why," said Sang Hwang.
Hwang is a Research analyst from SNL Financial. He says the insurance companies are ultimately trying to save some cash themselves, but it shouldn't worry drivers just yet.
"We shouldn't jump to the conclusion that these are going to affect consumers right away but we should be wary," said Hwang.
Yes, motorists are wary.
"People pick places to live by the schools, now we'll be picking places to live by the insurance rates; that seems silly," said Tyler.
The firm predicts that insurers will recalculate their rates soon because of this study.