Independent councillor David Clifft said offences committed inside Featherstone Prison were skewing the perceived level of risk in Essington.
The national crime map did not distinguish between offences committed in jail and those outside it, he said.
Staffordshire Police said crime had fallen overall in the area since 2009.
Staffordshire Police investigated 30 crimes at Featherstone Prison in 2008-2009 compared to 24 and 16 in 2009-2010 and 2010-2011.
South Staffordshire councillor Mr Clifft said: "We're calling for those crime stats to be kept separate and also for the Hilton Services crimes to be kept separate too.
"They don't give a true reflection of crime in Essington.
"Essington is quite a safe place to live."
He said the misleading information was having a negative impact on pensioners' insurance premiums.
June Smallman, from nearby Westcroft, said it was "unfair".
"I'm a pensioner. There are a lot of pensioners in Essington and the surrounding districts and when you are on a fixed income you've got to consider every aspect of money," she added.
Mr Clifft said police forces were also potentially misallocating their resources based on the area's skewed crime statistics.
"Police are obviously using their facilities on where it says the crime spots are and they are putting policing in Essington where it is not wanted and really it could better serve somewhere else."
He said with plans to expand Featherstone Prison for up to 2,000 inmates. the situation could get worse.
"Featherstone is soon to become a super prison, and obviously the crime stats are going to be a lot higher," he added.
Graeme Trudgill, from the British Insurance Brokers' Association, said a customer's claims history was still the most important factor in pricing any home or car insurance premiums.
He said there were many insurance providers and anyone who was unhappy with their current broker's service should shop around.
Crimes committed inside a south Staffordshire prison are adversely affecting home and car insurance in a nearby village, a councillor says.