New Bill Set to Take Zip Codes Out of Auto Insurance Process

Posted in Auto Insurance

September 28th, 2009

There is a new bill moving through the state Senate in Wisconsin that will effectively eliminate zip codes from consideration when determining auto insurance rates. This means that insurance companies will no longer be able to use where a policyholder lives to decide whether they could be an at-risk driver.

Instead, the bill will only allow insurance companies to look at the following when determining rates:

• Driving record
• Length of time driving
• Number of miles the vehicle has driven in a year

Rep. Leon Young (D., Wisc.) sponsored the bill to help consumers afford insurance no matter what area they live in. He expressed concern for those who lived in heavily-populated areas and their need to pay higher premiums solely based on that fact.

This will be the second time the bill has been introduced to the Wisconsin Senate. The first was in the 2009-11 biennium budget. It was vetoed by Gov. Jim Doyle. However, he is not the only one in opposition to the bill.

Insurance companies in the area complain that eliminating zip codes will not allow insurers to factor in high traffic and increased theft, which make certain areas “high risk.” In other words, they feel that insurance premiums should be based on whether a policyholder is more likely to turn in a claim – certain zip codes dictate a greater likelihood of this occurring.

Does this bill sound like a good idea for your state? Or do you think determining auto insurance rates by zip codes is something that should continue?