Why does it matter where I live? Your location might have a huge effect on your insurance rates.

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The state you live in plays a large role in how much you pay for car insurance. Your rates will reflect the number of vehicle thefts in your area and the number of uninsured drivers, along with local body shop rates.

In addition to these factors, every state has its own set of rules for liability coverage minimums. Some states require as much as $100,000 worth of injury protection and up to $25,000 for property protection. Other states, if you're willing to assume the risk, require as little as $10,000 for medical expenses and $5,000 for property damage. If you're looking for a bargain rate, you're not going to find it in a state with high minimums. Ten states operate under an entirely different set of rules for "fault" than other states. Check our our article on no-fault auto insurance states to learn more.

In general, people that live in large cities and densely populated areas pay more for insurance. This is because having more cars on the road increases the likelihood of accidents. Accident data from specific zip codes is often used to determine rates. Occasionally, sparsely populated areas have abnormally frequent accidents or disproportionately high medical expenses (usually due to hospital proximity). Insurance rates will reflect this.

Unfortunately, there isn't anything you can do to lower surcharges from living in a high-risk area. Where you live is one of several factors that, like your age or gender, you can't change. If you're looking for ways to save money on insurance—and there are plenty—this isn't one of them.