Living in Chicago's Austin neighborhood can double your car insurance...
I’m not making this up. A friend of mine — let’s call him Dante — moved from one side of the city to the other. Same job, same commute, same car. His premium jumped from about $1,200 a year to roughly $2,400. He called me, furious. “I haven’t had a ticket in eight years. Why am I paying double?” I told him it’s not him. It’s where he lives.
That’s an insurance desert.
Insurance deserts are areas where few carriers offer coverage, prices are sky-high, or both. They exist in every major city, but Chicago has a particularly bad stretch on the West and South Sides. The reasons are complicated — higher crime rates, more uninsured drivers, more fraudulent claims, older infrastructure — but the result is simple: good drivers pay absurd prices just because of their zip code.
I saw this from the inside when I was underwriting. The models we used didn’t just look at your driving record. They looked at the loss history of your zip code. If your area had a lot of stolen cars, everyone paid more. If your area had a lot of questionable injury claims, everyone paid more. Even if you never parked on the street. Even if you had a garage.
Dante’s new zip code had a theft rate about three times higher than his old one. He drove a Hyundai, which was on the “most stolen” list that year. So his rate doubled. Not because of anything he did. Because of where he parked his car at night.
Here’s the thing — and I’ll use that phrase just once — insurance isn’t about fairness. It’s about risk pools. If the pool of drivers in your zip code has worse outcomes, you pay more. That’s how the math works. But that math can feel discriminatory, because it is. Not necessarily illegal discrimination — zip codes aren’t a protected class — but it’s discrimination by proxy. Race and income correlate with zip code, so the effect is the same.
The Illinois Department of Insurance has been studying this for years. A report around 2023 — I forget the exact year — showed that drivers in predominantly Black neighborhoods on the South Side paid about 40-60% more, maybe higher in some areas than drivers in predominantly white neighborhoods with similar driving records. The state passed a law requiring insurers to justify large disparities, but enforcement has been slow.
So what do you do if you live in an insurance desert?
First, shop around. The same carrier that charged Dante $2,400 might have a competitor offering roughly $1,600. The difference can be huge. Don’t assume your current company is giving you the best rate. Every carrier has different risk appetites and different rating models. One might weigh credit scores heavily; another might weigh prior insurance history. Try at least three or four.
Second, ask about usage-based insurance. Some carriers offer plug-in devices or phone apps that track your actual driving — speed, braking, time of day, miles driven. If you’re a safe driver, this can lower your rate, even in a high-risk zip code. I’ve seen people cut their premiums by about 20-30% with UBI.
Use the Auto Coverage Optimizer to compare options.
Third, consider increasing your deductible. If you can afford to pay $1,000 out of pocket for a claim instead of $500, your premium will drop. Sometimes significantly. In a desert, the savings can be around $200-300 a year. Just make sure you actually have that $1,000 in savings.
Fourth, check if you qualify for any discounts. Multi-policy (bundling home and auto), good student, defensive driving course, low mileage, paid-in-full — all can reduce your rate. Some insurers offer discounts for anti-theft devices or for parking in a garage.
I remember a woman named Pam. She lived in Englewood, one of the toughest insurance markets in Chicago. She drove a 2010 Honda Civic with 150,000 miles. Her premium was about $2,800 a year. She couldn’t afford it. She was considering dropping coverage, which would have been illegal and reckless.
We sat down and ran her situation through the optimizer. Her car’s actual cash value was about about $1,500. Collision and comprehensive cost her $800 a year. That didn’t make sense — she was paying more than half the car’s value every year. We dropped collision/comprehensive. She kept liability and uninsured motorist. Her premium dropped to about $1,500. Still high, but manageable.
She also added a steering wheel lock — a $20 visual deterrent — and her insurer gave her a 5% theft discount. She switched to a pay-in-full plan (instead of monthly installments) and saved another $100 a year. Total savings: $1,300. That’s a month of rent for her.
So deserts are real, but they’re not hopeless.
Another strategy is to raise your credit score if you can. Most insurers use credit-based insurance scores in Illinois (though some other states have banned it). A better credit score can lower your premium, even in a desert. Pay down credit cards, dispute errors on your credit report, and don’t open new accounts before shopping for insurance.
Also, consider your vehicle choice. If you live in a desert, avoid cars that are commonly stolen (certain Hyundais and Kias from model years without immobilizers), cars that are expensive to repair (luxury brands), or cars with high claim frequencies. Before you buy a car, ask your agent for a quote on that model. The difference can be thousands.
Someone I worked with — let’s call him Kevin — was shopping for a used car. He found a great deal on a Kia Soul. I looked up theft data. That model was on the hot list. I told him to get an insurance quote before buying. The quote was about $3,200 a year. He bought a different car — a boring sedan — and his quote was roughly $1,600. Same driver, same zip code, different car.
Now, what about homeowners insurance deserts? They exist too. After the Marshall Fire in Colorado and the California wildfires, some carriers stopped writing new policies in high-risk areas altogether. In Illinois, we don’t have wildfires, but we have hail, wind, tornadoes, and flooding. Some Chicago suburbs near the Des Plaines River have seen rates spike after repeated flooding.
If you live in a flood zone, you might need a separate flood policy through FEMA’s National Flood Insurance Program. Private flood insurance exists too, but it’s often expensive. The best strategy is to avoid buying in a high-risk area if you can — but if you already own, make sure your home insurance valuator includes flood and backup coverage.
So here’s the takeaway. Insurance deserts are unfair, but they’re not a life sentence. Shop around. Use the auto optimizer. Raise your deductible. Drop unnecessary coverage on old cars. Improve your credit. Choose your car wisely. And if all else fails, get involved — write to your state representative about insurance reform. Illinois has taken steps, but more is needed.
Dante ended up switching carriers and dropping collision coverage on his old Hyundai. His new premium was $1,700. Still more than his old neighborhood, but not the gut-punch of $2,400. He said “I still feel like I’m being punished for living where I live.” He’s not wrong. But at least he’s not overpaying by $1,200.
P.S. A few years ago, I helped a small business owner on the West Side find an auto policy that wasn’t astronomical. We ended up with a regional carrier that specialized in urban markets. His premium was about $300 less than the major carriers. Regional carriers sometimes have better rates in deserts because they have more accurate data for those zip codes. Don’t ignore them.
By Marcus
