The Consumer Federation of America, a nonprofit advocacy group, tested annual auto premiums from six big insurers in 10 cities. The tests found that good drivers from homes that are near each other — in some cases less than 100 yards apart or even right next door — yet in different ZIP codes are often quoted disparate rates.

Living in the wrong ZIP code — even a short distance from a boundary — may mean a difference of hundreds of dollars in your automobile insurance rates, a new analysis finds.

With other factors being equal, addresses in less affluent ZIP codes with higher minority populations were quoted annual premiums that were $410 higher, on average, than those in neighboring ZIP codes with wealthier, more heavily white populations, according to the analysis.

The report included photographs of the homes tested, like two in Buffalo, where the average cost was $1,697 a year on one side of the line and $2,315 on the other.


In every city tested, at least one insurer charged $200 more for the same coverage for someone living on the “wrong side” of a ZIP code line, researchers found.

“Jacking up rates for living on the wrong side of the street is arbitrary and unfair,” Douglas Heller, an insurance consultant who conducted the analysis with a federation researcher, said in a call this week with reporters. (While the report used specific addresses in its research, Mr. Heller said, it did not seek actual insurance premium information from people living at those addresses, because of privacy concerns.)

Not all insurers quoted higher rates in every instance. In all but one of the cities, at least one insurer charged a driver in the poorer ZIP code the same or a slightly lower premium. (The exception was Detroit, where just two companies would provide online quotes.) In Atlanta, for instance, Allstate charged 2 percent less in the lower-income ZIP code, while other companies charged an average of 26 percent more in the poorer district.

Insurers argue that dozens of factors affect a driver’s premium, including the driver’s address, because it indicates where the car is most often driven. The Property Casualty Insurers Association of America, an industry group, said in an emailed statement that “territorial rating” was a well-established practice and that it was “indisputable” that insurance losses and expenses were higher in some areas than others, because of factors like weather, congestion, legal costs and road quality.

The association dismissed the federation’s suggestion that racial or income bias occurred in setting premiums, noting that state laws ban such bias and adding that insurers “fully comply with the laws of each state.”

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.”

Liberty Mutual’s rates “did not vary much” between adjacent ZIP codes, with the exception of quotes in Columbus and Detroit, the analysis found.

Here are some questions and answers about auto insurance premiums:

How can I keep my auto premium as low as possible?

Industry representatives and consumer advocates agree on at least one thing: It’s wise to shop around and seek quotes from different insurers. Mr. Barry said the various quotes for the same addresses in the research showed a “competitive marketplace,” with insurers giving different weight to different factors.

How does my credit affect auto insurance rates?

Most states allow insurers to consider a credit-based insurance score when setting rates, so taking steps to keep a good credit history, like paying bills on time and keeping credit card balances below the limit, can help hold down premiums. California, Hawaii and Massachusetts bar the use of credit-based insurance scores to determine how much drivers should pay, Mr. Barry said.

Where can I complain about my auto insurance?

Insurance is regulated mainly by the states. The National Association of Insurance Commissioners offers a map on its website, with links to online complaint forms for each state.