Car insurance postcode lottery: We reveal how insurers charge up to FOUR TIMES as much to cover the same car in East London as rural Shropshire

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  • Insurers can quadruple the cost of engine coverage based solely on your zip code.
  • These firms can also increase excesses by increasing the cost of filing a claim.
  • Even a store search may not help, as many insurers ignore some zip codes.

Drivers are facing a zip code insurance lottery that can see them paying up to four times as much for car insurance premiums depending on where they live, This is Money analysis found.

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The problem doesn’t end with premiums either, because if you’re in the “risk” zone, many insurers also charge high unavoidable deductibles – the cash you have to pay before a claim is paid.

The location of a motorist, as well as other factors such as driving history and vehicle type, affect how much drivers pay.

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Insurers are careful to hide exactly how they set their premiums, claiming it is commercially sensitive information.

But it is known that when it comes to where you live, insurers take into account factors such as the risk of theft and the statistical likelihood of floods and accidents to set premiums.

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Don’t rely on it: cheap insurance premiums and the choice of insurer may depend on where you live.

So to give you an idea of ​​how where you live affects what you pay for car insurance, This is Money compared quotes for a number of vehicles, keeping everything the same but using several different zip codes.

They ranged from Newham in East London, the UK’s highest premium rate, to the rural village of Hodnet in Shropshire, voted the most posh in the UK.

We also included the expensive West London Chelsea region due to its high proportion of expensive cars.

Not surprisingly, East London postcode drivers pay the highest insurance premiums – as much as 3.94% in the case of the Land Rover Discovery, where insurance costs range from £759.71 to £2,999.73.

But depending on where you live, not only insurance premiums go up, but also your mandatory deductible.

This is something that is often overlooked by consumers buying car insurance, which is often done on a premium price basis.

How auto insurance premium quotes vary by zip code
Car East London West London Rural Shropshire
Land Rover Discovery £2993.74 £2553.67 £759.71
Mercedes E Class £2136.78 £2098.99 £685.63
bmw 3 series £1395.95 £1072.03 £646.41
Honda Jazz £1144.33 £893.46 £556.84
Ford Fiesta £1113.42 £884.63 £560.45
Vauxhall Corsa £1075.47 £851.22 £560.45
Volkswagen Golf £955.80 £823.64 £569.85
GoCompare, all quotes are the cheapest available

As with the premium example above, people living in zip codes that are considered riskier by insurers tend to pay higher deductibles.

But this is not the case across the board. For example, the driver in our example who insured a Ford Focus would pay an extra £150 in East London, the most “risky” area we tested.

This surplus rises to £350 in both West London and Shropshire.

For other vehicles, the mandatory excesses remain the same regardless of location.

How insurance deductibles vary by location
Car East London West London Rural Shropshire
Land Rover Range Rover £1400 £1400 £650
Land Rover Discovery £500 £500 £350
Volkswagen Golf £350 £350 £250
Honda Jazz £500 £500 £250
Mercedes E Class £350 £350 £350
GoCompare, all quotes are the cheapest available

Another factor that varies depending on where you live is the number of insurers willing to provide you with a quote.

The more quotes, the more competition, which usually means that the consumer is more likely to get a lower price.

But for every car we tested, the number of insurers willing to quote dropped significantly depending on how risky the area was considered.

For example, someone insuring a Range Rover in Newham would only have four insurers to choose from, while a driver in Shropshire would have 16.

How the number of auto insurance offers depends on the postal code
Car East London West London Rural Shropshire
Ford Fiesta thirty 38 42
Honda Jazz 27 31 46
Vauxhall Corsa 27 41 44
Volkswagen Golf 24 33 34
bmw 3 series 18 20 26
Mercedes E Class 16 23 31
Land Rover Discovery eleven 14 22
range rover 4 eleven 16
From GoCompare

A spokesman for the trade body of the Association of British Insurers said: “Your postal code can affect the cost of your car insurance, for example by reflecting the level of vehicle crime where you live.”

“But it will be one of many factors the insurance company will consider — like your age, the number of claims, and the type of vehicle — when evaluating your risk.

“You may not be able to do much about where you live, but auto insurance is competitive so you can shop around to get the best auto insurance deal for your needs.”

Read This Money Guide to Lowering the Cost of Auto Insurance

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