I called my auto insurance company and inquired about a change in
residence from Chicago to Los Angeles. I told them I would drive the
same car, have the same general coverage including liability,
comprehensive, and collision, and a $500 deductible, and drive about
the same number of miles a year. They told me my rates would increase
from about $1200/year to about $2400/year.

My question is: why? Here are the reasons I would think that rates
would be lower in LA: people drive less aggressively (I do believe
this is true), the streets are generally wider, allowing more room for
error, and there are fewer days where weather increases accident risk.
I also thought that people spend more time on freeways in LA, and that
freeway driving is safer than city driving.

Is there something about California law versus Illinois law that makes
doing business in one state so much more costly to the insurers than
another? What other factors are important but not obvious? The answer
is not that people drive more in LA, because we are talking about the
same number of miles per year.

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Clarification of Question by potomac7-ga on 26 Feb 2005 02:43 PST

The reason I don't ask my insurance company is that they have no
particular incentive to tell me, nor are the people you talk to on the
phone knowledgeable about this.

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Clarification of Question by potomac7-ga on 26 Feb 2005 07:47 PST

Just to clarify, I am not looking for advice on how to get lower
rates. I just want to understand why there is such a difference
between rates in these two states.

Insurance companies keep statistics on the cost to insure people in
every location where they do business.  Statistically, it costs them
more to insure someone in LA than Chicago.  There is a lot more to it
than driving conditions and number of miles you drive.  The number of
car thefts is one factor.  The court system is another - perhaps
courts award larger judgements for auto accidents in California.  I
happen to know that IL has fairly low insurance rates compared to
other states.  I know people who have claimed residency in IL just for
this reason.

Why don't you just ask the insurance company what factors they are
using in computing your rate?

It might be an idea to get a couple of quotes from CA based insurance
companies (or even brokers)

Insurance companies tend to be 'cherry pickers' or 'lemon pickers'
  (we can ignore lemon pickers in this case)
- to your current company you look like a lemon
- to a CA company you might look like a cherry

High rates from 'cherry pickers' simply means that they don't want you on the books.

Hi potomac7-ga,
Your auto insurance rates may vary depending on your residency. Auto
insurance agencies look at your ZIP code's loss history.  This is an
umbrella term that includes your area?s claim?s history, crime rate,
and number of drivers. So, if you live in an area that has high rates
of theft and claims, you can expect to pay more for auto insurance to
offset these costs. Generally, highly populated areas have higher auto
insurance rates because traffic increases the likelihood of an
accident.

If you live in an area with a lot of traffic, your risk of an accident
claim increases. The rise of road rage in recent years only makes this
problem worse. Tailgating, speeding, and running red lights can all
have disastrous results. Although being stuck in traffic can be
frustrating, it?s important to remain patient and courteous on the
road. Those who live on the other end of the traffic spectrum can also
be at risk for accidents. Inhabitants of rural areas are often faced
with extreme weather conditions and abundant wildlife, both of which
can make driving more dangerous.

BUT, you can get a good deal from comparing rates.  I got this
information from a really good site - 
http://www.easyquoteinsurance.com.  Good luck in finding a good rate.