Auto insurance rates in Massachusetts can vary significantly depending on where you live. According to Christopher Stark, the executive director for the Massachusetts Insurance Federation, drivers in densely populated areas tend to pay more for auto insurance. This is due to factors such as higher levels of congestion and a greater likelihood of accidents in urban locations.
One example of this disparity can be seen in the comparison between Newton and Revere. Newton, with a population density of 4,885 people per square mile, has one of the least expensive auto insurance rates in the state. On average, a driver in Newton pays $133 a month for full premium auto coverage. In contrast, drivers in Revere, a city with a population density of 6,218 people per square mile, are paying the most expensive auto rates in Massachusetts, with an average monthly cost of $229.
Bankrate, a personal finance company, analyzed insurance rates using data from Quadrant Information Services. They found that the top 10 most expensive municipalities in Massachusetts to insure your car are all in urban areas, highlighting the correlation between auto costs and population density.
The practice of territorial ratings plays a significant role in how auto insurers calculate rates. Insurance companies assess the likelihood of losses, such as accidents and thefts, in each territory of the state. This allows them to determine standard rates for different geographic regions. In Massachusetts, over 90% of vehicular deaths in 2022 occurred in urban areas, emphasizing the higher risk associated with densely populated locations.
Territorial ratings also ensure that accidents are tied to the municipality where a driver registers their vehicle. This means that even if an accident occurs in a different location, it will still be associated with the driver’s registered area. While this system helps insurers assess risk accurately, some critics argue that it discriminates against communities of color that are more likely to reside in urban areas.
In response to these concerns, Sen. Pavel Payano introduced a bill to restructure Massachusetts‘ rating formula. The proposed bill would give more weight to a driver’s local area and less to the statewide average, potentially reducing auto rates in urban areas. Payano cited data showing that racially diverse communities pay significantly more for auto insurance compared to less diverse areas.
Overall, the fluctuation in auto insurance rates in Massachusetts reflects the complex interplay between population density, risk factors, and insurance practices. While territorial ratings help insurers assess risk accurately, there are ongoing discussions about how to ensure fairness and equity in the pricing of auto insurance across different communities.