When you first talk to your auto insurance agent, chances are that your zip code will be the very first thing they ask you for. There are some exceptions. But, in general, this is the case.
So, how does your zip code affect your perceived risk? And why is it so important to car insurance companies?
Traffic 
The most obvious part of the equation is traffic. If you live in the heart of the city with multiple freeways criss-crossing every which way, you probably see share the road with more cars in a day than someone in a rural area encounters in a week. More cars means more accidents, and those accidents show up on your insurer's analysis of your neighborhood.
If you live in a quiet, secluded part of the state, you have fewer vehicles to share the road with. That reduces the risk of accidents. So, you naturally pay a lower rate because car accidents are less common in your area.
There are exceptions to the urban/rural rule, of course. After all, your insurer is using number of accidents in its calculations — not strictly population data. There are certainly some dangerous rural areas and some safe urban areas. But, by and large, you can expect to see a lower rate if you live away from the city.
Theft And Vandalism
Besides traffic accidents, car owners and their insurers also must contend with the risk of crime. If you have a lot of car thefts in your area, you'll be paying a little more for car insurance — simply because that increases the likelihood that your car might be the next one stolen. The same goes for vandalism and break-ins.
Your zip code helps car insurance providers to determine your risk based on certain factors that are out of your control. A clean driving record and a high credit score reflect well on you. But, as we all know, you only have so much power over what happens out there on the open road. Dense populations generally mean more traffic and more crime, and your zip code is a relatively easy tool for your insurer to use to calculate your risk of both.