Automobile insurance can be a confusing bout of endless amounts of information; things a person can do to lower their insurance rates, factors that affect insurance, different types of coverage, etc. but one thing is for sure, location matters when it comes to insuring a car. Auto insurance variations by location may be the single most determining factor in insurance rates that is out of the drivers hands. Insurance premiums can vary from state to state, and sometimes can vary within large or major metropolitan locations. Automobile insurance is regulated by the states insurance commissioner, and every state has its own rules and regulations for mandatory drivers insurance.

Each state periodically looks at a number of statistics and analyzes data for a certain time period. This allows the insurance commissioner to assess risks and problem areas and adjust standards accordingly for each location.

There are several components that go into determining risk factors, and thus an increase or decrease in insurance prices, depending on the location. One of the main points of interest for the insurance commissioner is the number of motor vehicle theft reports and subsequent vandalism and damage. They also analyze the number of accidents in a given time, as this will directly affect the insurance prices because of the insurance claims in direct proportion to the number of accidents reported. The insurance commissioner is also likely to analyze climate and weather, because extreme conditions such as ice and snow, or flooding are likely to increase accident and property damage rates. One of the minor factors that may affect insurance rates is the cost of car repair, which varies greatly by geographical location.

According to polls and data collection, there are statistically good and bad places to live, if one is concerned with auto insurance rates. Although its tempting to categorize these areas based on geographic location, numerous other factors come into play. New York, along with Washington D.C, Nevada and Arizona are among the top ten states with the highest insurance premiums for 2005. Although the population varies greatly in each of these locations, the persons per square mile statistics are similar, in that they are all very high. Trends have shown that in areas with dense populations, accident and crime rates are likely to increase. These areas are also notorious for extreme weather conditions, such as winter storms and blazing heat. Iowa, Ohio, Virginia and Indiana, along with six other states claim their title as the ten best states to live in, when considering automobile insurance. The crime rates along with weather conditions are fairly calm and stable, which leads to a noticeable decrease in insurance premiums, with an average of less than half that of New Yorks rates.

Another factor to consider when comparing insurance rates is not only the price of the automobile insurance, but also the cost of living and its subsequent compensation in regards to financial conditions such as minimum wage. For the ten most expensive states, minimum wage is higher than the federal average, and similarly the minimum wage is comparable to the federal average for those states that rank the lowest in premium rates.

Although location is a significant factor in automobile insurance rates, it cannot always be an avoidable one. Maintaining a safe and honorable driving record can help reduce rates significantly, regardless of geographical area.