As an extreme example of this, I moved about 6 miles, from NE Portland to NW Portland (oregon), and my insurance dropped from $600/6 mos to $450/6 mos.

I am fairly sure (since I only have liability insurance) that this is indeed based on the number of accidents/incidents/claims in the zip code.

My old house was at the corner of two major streets, and there really was a major accident there ONCE a week. Once a van even plowed into the lightpost outside our house, causing it (the house) to shake. It was funny to look at my phone bill and see all the 911 calls. (i don't think anyone was ever seriously hurt)

Plus, I myself got in a motorcycle accident 3 blocks from my house. I moved, and my insurance went down right after that!

-Aaron