Survey: Car insurance premiums vary by hundreds, depending on location

A survey of New York auto insurance premiums by a financial-advice website found that identical drivers could pay a difference of almost $900 a year to insure the identical car, depending on where they lived on Long Island.

It also found that in even the cheapest communities studied on the Island, the same driver paid $422 a year more than the average calculated for New York State.

The research documents dramatically that, in the sometimes arcane world of auto insurance premiums, where you hang your hat can be as important as how and what you drive.

It also reinforces something that most drivers probably know: that Long Island is an expensive place to insure a car, where premiums can take a big bite out of a family budget. That's especially true for households with multiple vehicles or for young drivers, who pay particularly high rates.

The research, by the Manhattan-based website ValuePenguin.com, looked at auto insurance premiums in a sampling of 100 ZIP codes in New York State, including 15 on Long Island. For each ZIP code, the survey obtained online coverage quotes from 16 insurance companies for a hypothetical middle-aged driver seeking to insure a 2010 Toyota Camry.

Among the communities surveyed in Nassau and Suffolk counties, insurance costs could vary by $869 a year based solely on where a person lived. Annual insurance premiums ran from a high of $2,807 a year in Hempstead Village to a low of $1,938 in Sag Harbor, Mattituck and the village of East Hampton.

The new survey, done during the summer by analyst Ting Pen, a co-founder of ValuePenguin.com, provides a glimpse at average insurance premiums in the state and on Long Island -- data not available from insurers or the state Department of Financial Services, which oversees insurers.

For each of the 100 ZIP codes around the state, Pen conjured a customer -- a middle-aged male with a clean driving record who drove that Camry 12,000 miles a year. The driver's profession and income weren't provided to insurers.

The "customer" sought coverage that is considerably more expensive than the basic liability coverage required by state law, although financial advisers might deem it more prudent: $100,000 per accident for bodily injury and coverage for collision losses, fire and theft.

Pen then averaged the quotes from the 16 companies.

The highest rates quoted for the Camry were in the five boroughs of New York City -- including the top rate of $5,305 a year in Brooklyn.

The state's lowest rate was in upstate Corning: $1,053.

Costlier for urban dwellers

Pen didn't address the specific reasons for costs in each community but, on the Island, generally, the further east the ZIP code, the lower the premiums. In an email, a Progressive spokeswoman said, "Generally, city dwellers pay more for auto insurance than rural dwellers. Cities have much denser population than the country so the risk for an accident is much higher."

In setting rates, insurers take into account local characteristics such as the car theft rate, traffic congestion, accident rates, past claims in the area for vandalism and flood damage, a region's medical costs, the prevalence of insurance fraud and the propensity of an area's residents to sue insurance companies after accidents. But exactly how insurers weigh those factors is a trade secret and varies by company, industry experts say.

Insurers also take into account a driver's credit rating, insurance experts say, because statistically, people with troubled credit have more accidents. They also look at the make and model of the car being insured and the driver's marital status; married people are statistically less likely to have accidents.

Among personal factors drivers can't control are their ages and sex. Teens and males generally pay more because they are considered at higher risk. Major insurers and most local brokers were reluctant to discuss specific neighborhoods, while the Department of Financial Services did not respond to a request for an interview.

A spokesman for the insurance industry, president Robert Hartwig of the Manhattan-based Insurance Information Institute, said, "What insurers focus on solely is the likelihood and cost of an accident in a given area."

In some cases, a neighborhood's car theft rates offer a clue to high rates. In Hempstead Village, with a population of about 55,000, 122 cars were stolen last year, according to police statistics compiled by the state Division of Criminal Justice Services. That represents one stolen car for every 450 inhabitants. By comparison, in all of Nassau County, with 1.3 million people, 887 cars were stolen -- one for every 1,465 people, according to the state statistics.

"It's not just stolen vehicles -- that's a lot harder now" because of advances in anti-theft protection, said office manager Samantha Tomeo at Fiesta Auto Insurance Center on Hempstead Turnpike in West Hempstead. "It's breaking windows, stealing things from inside the car, stealing car parts -- those things still cost insurance companies money."

Accident rates per mile of road tend to be higher on Long Island than in many other parts of the state, according to data from the state Department of Motor Vehicles. In 2012, the last year for which local data are available, the state average was 1.1 crash per mile, while Nassau's was 3.1 and Suffolk's was 1.6.

Hempstead highest

Hempstead Village had 8.3 accidents per mile.

"There's a lot more traffic, obviously, than in Glen Cove or Suffolk," said Allstate broker Maria Judy Gonzalez, whose office is in Hempstead. Contributing to the traffic, she noted, are the presence of a county district court and Hofstra University.

The Long Island community with the second-highest premiums after Hempstead in the ValuePenguin survey was Lawrence, population 6,500. There, premiums for the Camry averaged $2,760 per year. Nassau County Police said they had only five stolen car cases there and in North Lawrence last year -- although, they note, a "case" could involve more than one car. (For most other communities, the police cited actual numbers of cars stolen.)

The state DMV says the accident rate in Lawrence in 2012 was much lower than the county average -- 1.1 per roadway mile.

But Hartwig said insurers also likely would consider the village's proximity to Queens and its location in generally congested Hempstead Town -- a factor probably affecting premiums in many western Nassau communities, he said.

Hartwig said the high rate also could be related to claims for vehicles damaged or destroyed by superstorm Sandy two years ago.

Garden City's premium for the Camry was the third-highest of the 15 Long Island communities studied -- $2,596 a year. The village has 22,500 residents. Although only 10 cars were stolen there last year, the village's accident rate of 3.4 crashes per mile of road was three times the county average. Local brokers said the presence of the Roosevelt Field shopping mall could be a factor, adding to the traffic on busy streets like Old County Road and Stewart Avenue.

Mineola, with 18,900 residents, was fourth on the list after Garden City, with a premium there for the 2010 Camry averaging $2,570, ValuePenguin said. County police had only eight auto theft cases in the community last year but Mineola's accident rate was even higher than Garden City's -- 3.7 crashes per roadway mile, perhaps related to traffic from the presence in the village of the state and county court complex and other county government buildings.

Insurance broker James Sutton, whose office is in West Islip, said superstorm Sandy damage might contribute to the relatively high rates in the ValuePenguin survey for the communities tied for fifth place: West Babylon and Lindenhurst, where the Camry owner would pay $2,384 a year in premiums. "Those areas were pretty hard hit," he said.

Suffolk County Police said there were 20 auto thefts in Lindenhurst last year and 27 in West Babylon -- in both cases low numbers relative to countywide statistics when population is factored in.

Lindenhurst's accident rate is slightly higher than the county average, at 1.9 crashes. There are no state crash statistics for the hamlet of West Babylon, but the rate for the entire town of Babylon, including Lindenhurst and West Babylon, is 2.5 crashes per road mile -- the highest of any of Suffolk's 10 towns.

Sutton, who is this year's board chairman of the Independent Insurance Agents and Brokers of New York, said that 30 years ago insurers simply divided the entire island into four or five rating territories to calculate rates. The use of computer programs now enables them to become more community specific and generally more sophisticated in predicting losses and quoting premiums.

"I used to be able to tell you, based on their driving record, age and type of car, what it would cost for insurance," he said. "Today, I couldn't tell you."