Long-suffering Massachusetts motorists not only must deal with some of the worst traffic in the country, they also pay a hefty price for putting that vehicle on the road.
That’s especially true if you live in more congested urban centers.
We’re not talking about the vehicle’s purchase price, an onerous burden in itself.
It’s the cost of insuring it – and the huge variances in that number – that’s aligned to where you live.
It’s painfully plain that drivers in densely populated areas tend to pay more, according to Christopher Stark, the executive director for the Massachusetts Insurance Federation.
According to Bankrate, a personal finance company, urban areas comprise the top 10 most expensive municipalities in Massachusetts to insure your car, highlighting the correlation between auto costs and population density.
That’s a reality to which motorists in Lowell, Fitchburg, and Lawrence can attest.
While it costs Lowell drivers on average $151 a month for car insurance, those right over the line in Chelmsford pay only $118.
That same disparity between more densely populated cities and their immediate suburban counterparts applies to Fitchburg ($136) and Westminster ($114), and especially Lawrence ($189) and Andover ($121) as well.
Bankrate used Quadrant Information Services, a data analytics company, to analyze insurance using the most recently approved rates for August for zip codes and areas in the United States, the company told MassLive. The rates were then weighed against the population density of each geographic region of the country.
You can also attribute part of the reason for these stark insurance premium differences to how auto insurers calculate rates.
Generally, insurance companies set their rates by estimating the likelihood of losses — due primarily to accidents, thefts — in each territory of the state, MIF Executive Director Stark said.
This practice, known as territorial ratings, allows insurance companies to determine a standard set of rates for a given area.
“The reality of it is, is that in many instances, these are more urban locations and with that comes a higher level of congestion, and with a higher level of congestion comes a higher level of accidents,” Stark added.
Statistics do show that the more densely populated an area, the more likely an accident will occur.
In Massachusetts in 2022, over 90% of vehicular deaths occurred in urban areas, compared to 7% in rural areas, according to the Insurance Institute for Highway Safety.
And the communities with the state’s top 10 highest monthly insurance premiums — Revere ($229), Brockton ($228), Chelsea ($226), Lynn ($209), Everett ($206), Randolph ($198), Malden ($197), Winthrop ($195), Lawrence ($189), and Springfield ($188) — all fall into that high-density category.
Territorial ratings also stick to where the driver resides, no matter where an accident occurs.
According to Stark, if a driver registers their car in Lynn and gets into an accident in Boston, the accident would still be associated with Lynn.
However, one lawmaker in particular has criticized the territorial system as discriminating against communities of color.
As we’ve mentioned previously, Pavel Payano, a Lawrence Democrat who also represents Haverhill and Methuen, wants to reduce auto insurance rates in urban areas by making the statewide average part of the rating formula.
He and other lawmakers don’t want the cost of auto insurance determined exclusively by someone’s ZIP code, claiming that people of color in low-income and urban areas pay higher rates.
However, insurance companies say the move would take away one of the only tools left for them to determine rates, and could raise insurance payments for all.
Payano filed a bill last year that would restructure Massachusetts’ rating formula.
That legislation would give up to 75% in weight to a driver’s local area, with the other 25% based on the statewide average, a move that would help cut down auto rates in urban areas.
While testifying before the Joint Committee on Financial Services in May of last year, Payano cited data from the Merit Rating Board that showed racially diverse communities paid an average of 90% more than drivers in less diverse areas, the State House News Service reported.
The Lawrence lawmaker held up Connecticut as a similar state that has added some balance to the insurance premium playing field.
Payano cited a study in Connecticut that showed the 75/25 ratio there has led to declines in premiums by up to 11% in Hartford, the News Service reported.
We share Sen. Payano’s frustration with the current insurance rating system.
His bill would at least give some recognition to urban drivers who maintain clean driving records, and should receive a discount, not a penalty, for their responsible behavior.
If the 75/25 rating can work in Connecticut, there’s no reason it can’t work in this state as well.
Sen. Payano’s rating adjustment proposal merits serious consideration, something it hasn’t received thus far in the Legislature.
