NJ Auto Insurance Rates Highest In Poor Cities, Study Says

The Record ( — Tuesday, April 2, 2013

The Record

It's no secret that the price you pay for auto insurance depends in part on your ZIP code, and a new survey shows just how much of difference an address can make.

The most striking result of the recently released analysis of state data by California-based TZ Insurance Solutions LLC is that residents of New Jersey's poorer cities, including Newark, Paterson and Passaic, are paying through the nose.

Their rates are an additional thousand dollars or more a year, compared with those paid by residents of suburban Montvale and Mahwah, according to the survey by the insurance agency, which does business as

Regulators split the state into 49 ratings territories. In the Montvale rating territory, which includes Franklin Lakes, Westwood and about 10 other northern Bergen County ZIP codes, the average quote was $1,632, based on prices from dozens of insurers on standard policies written on a variety of driver profiles.

For an address in the city of Passaic, the average quote on a comparable sampling of policies, with identical driver profiles, was more than $1,100 higher at $2,743. Paterson residents pay almost as much, $2,728 on average.

The big disparity between the cities and the suburbs is nothing new but it is "grossly unfair," said Phyllis Salowe-Kaye, executive director of the consumer watchdog group New Jersey Citizen Action. "The urban communities keep getting socked and socked and socked," she said.

"In most states the people in the cities pay more," said J. Robert Hunter, director of insurance for the Consumer Federation of America in Washington, D.C. "It has a lot to do with traffic density but they really pile on to the poorer people," Hunter said.

Drivers sometimes may pay more based on their occupation or education, regardless of actual driving records. Insurers also look at credit scores and whether you own a home, in addition to age, marital status, claims history and driving record.

Residents of Newark, East Orange, Passaic, Atlantic City and Camden pay the most, the survey said, while those in Morristown, Whippany, and Caldwell pay the least. Teaneck, at $2,131, is right around the state average.

ZIP codes that abut Paterson have substantially lower rates. In Fair Lawn, part of the Saddle Brook territory, the average is $2,087.

In Woodland Park, formerly known as West Paterson, and part of the Montclair territory, the average is $1,987.

Overall, New Jersey auto insurance rates are consistently among the highest for reasons that include many congested roads where collisions are common, comparatively high repair and medical costs, and high vehicle theft rates in urban areas. Rates are approved by state insurance regulators.

According to industry professionals, insurers charge more in the simply because they have to pay out more in claims to city drivers.

"The rates are commensurate with what the risks are," said Lorretta Worters, spokeswoman for the Insurance Information Institute, a non-profit communications organization supported by the industry.

Newark has the state's highest average annual insurance rate at $2,778, which is 30 percent higher than the state average and 80 percent higher than Hillsborough Township in Somerset County, which has the lowest rate in the state at $1,548 a year, according to the study.

The survey also said Newark is the vehicle-theft capital of the state, citing 2010 FBI data. There were 3,620 vehicle thefts in the city in 2010, which put the theft rate at one car stolen for every 77 residents. The statewide average, meanwhile, was one theft for every 557 residents.

The insurance price quotes were from samplings of driver profiles that ranged from a single, 23-year-old male driving a 2005 Buick Century to a married couple with a policy covering two cars, a 2011 Ford Escape and a 2009 Chrysler Town and Country.

The study was done only for New Jersey, because the state's Department of Banking and Insurance happens to have a comprehensive online database of pricing information that made it possible, said Benjamin Zitney, a spokesman for, which would like to raise its profile. "Auto insurance companies' rating formulas are varied and complex, so it's hard for consumers to understand how much a certain factor can influence their auto insurance premiums," said Zitney, explaining why the company did the study.

"By doing a study like this, we can provide some insight into how much a single factor like where you live can affect how much you end up paying for financial protection," he said.

The company pulled 28,665 quotes to conduct the analysis. All of the quotes were based on policies with comparable levels of coverage and $750 deductibles on comprehensive and collision. All assumed no violations or accidents in the past three years.

The same data are available to consumers, who can go online, enter their ZIP code and call up premiums from 65 insurers.

All else being equal, the impact of the address is substantial, said Cathy Marecki of Lodi, an agent at the Konikowski Insurance Agency in Wallington.

"The cost depends on where you live," she said "I have clients who moved from Wallington to Wayne and their insurance went down. They were very happy," she said.

According to the survey, the average quote for the Wallington ZIP code, which is part of the industry's Clifton rating territory, was $2,433. In Wayne, which is part of the Montclair rating territory, it was $446 less at $1,987.

To compare rates by ZIP code:

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