New zip code lowers auto insurance rates

When the U.S. Postal service changed the zip codes of several Southwest homes from 55409 to 55419, some residents fumed about the hassle of having to get new stationery and checks.

What they didn’t expect was a financial windfall: lower car insurance rates.

David Raymond, who lives on the 4800 block of Fremont Avenue South, saw the cost of insuring his 1999 Dodge Caravan and his 2004 Toyota Corolla cut by 26 percent per year — a $520 annual savings, even though nothing had changed other than one Postal Service digit.

"It’s good for us who have had their zip codes changed to 55419, but it is bad in the sense that it shows how Minneapolis residents pay more than the suburbs for auto insurance," Raymond said.

Raymond, who is insured by American Express, said that since his zip code changed July 1 and his policy ended on July 27, he has already received a $36 check from his insurance company for over-payment. (He says the cost of his homeowner’s insurance stayed the same.)

Kathryn Keller, an agent for Farmer’s Insurance at 618 W. 58th St., said that insurance rates are base on actuarial tables and statistically, 55419 is a safer zip code than 55409.

"Most of us in the auto insurance industry use territories which are based on zip codes to determine our rates," Keller said. "City residents pay a higher premium. But for many years, 55419 residents have gotten the suburban rate. For some of my customers, the new zip code can mean as much as a 33 percent savings."

Keller, who lives on the 4400 block of Pillsbury Avenue, is just inside the windfall zone. She said the northern boundary of the new 55419 is 44th Street; the changed area extends from Portland Avenue to Penn Avenue and south to 50th Street, covering part of Kingfield, East Harriet, Tangletown and Lynnhurst.

Keller cautions that not every new 55419 household will receive a rate cut. She said that some insurance companies don’t use zip codes and instead have one city rate and one suburban rate.

Her advice: call your insurance agent and find out.