Your Neighbor in an Adjacent ZIP Code May Pay Less for Car Insurance

Similarly, Michael Barry, a spokesman for the Insurance Information Institute, said auto insurance pricing was “colorblind.”

The consumer federation said its findings reflected broader industry practices in assigning premiums, which account for socioeconomic factors like a driver’s job title, education level, homeownership status and credit history. The federation opposes the use of such factors, rather than a person’s driving record and miles driven.

The federation sent a letter to all state insurance commissioners, asking them to consider its findings. The letter, signed by J. Robert Hunter, the federation’s director of insurance, said the federation wasn’t “entirely” opposed to using ZIP codes. He said there might be “actuarially sound” differences in risk between a driver who commutes through dense urban areas and one who goes through less populated areas.

But, Mr. Hunter argued, drivers living in adjacent ZIP codes generally “should not see much, if any, change in premium.” He added that it was the duty of regulators to prevent border price differences like those found in its report.

The National Association of Insurance Commissioners declined to comment on the report. Stefanie Bryant, an association spokeswoman, said in an email that the association’s auto insurance working group was examining “similar” issues. (Consumer advocates have criticized the working group, saying its data collection lacks rigor.)

For its analysis, the federation compared rates for hypothetical good drivers, with the same characteristics but different addresses, in Atlanta; Austin, Tex.; Buffalo; Columbus, Ohio; Denver; Detroit; Minneapolis; Philadelphia; Tampa, Fla.; and Trenton. Researchers sought online quotes for basic coverage from Allstate, Farmers, Geico, Liberty Mutual, Nationwide and Progressive. (State Farm’s website didn’t allow researchers to retrieve enough information to be used in the report, the federation said.)

Rates across ZIP code lines increased the most for Farmers, with average changes of 31 percent, and Allstate, at 28 percent. Farmers and Allstate referred inquiries to Mr. Barry, who said, “Where you drive is strongly linked to the likelihood that you’ll get into an accident.”