For Anita Dermer, the cost of insuring her 2003 Honda Acura rose $600 a year, just because she moved five minutes down the road from North York to Scarborough.
The former high school teacher lived near Victoria Park Ave. and Lawrence Ave., but moved 4 kilometres east to Midland Ave. and Lawrence. That was the only change in her circumstances.
“It seemed blatantly unfair,” she says. “The (premium is based) on where the driver lives, not where he drives and leaves his car.”
What happened to Dermer happens to all of us, though we may not be aware of it. Insurance companies base your annual premium on a handful of things, which are lumped together as an assessment of your risk as a customer. Your driving record plays a big part, but where you live and the insurer’s history of claims in that area is a big one.
Dermer says the irony is that during all the years when she enjoyed lower premiums, her car was driven and parked in Scarborough five days a week. She worked there, her parents live there and she took courses and classes there, all without incident.
“Yet only when I actually moved here, did the insurance company suddenly care that my car was now in Scarborough,” she says.
Insurance companies use the first three digits of postal codes to help build profiles. They compile tens of thousands of claims and look at the patterns. While Dermer didn’t move far and has a good record, those didn’t count as much as the amount paid out by the insurer in the new neighbourhood.
“The whole premise of insurance is that everybody gets together and pays a piece, so that if something happens to any one person, it’s covered,” says Anne Marie Thomas, with Kanetix.ca, an insurance rate comparison website.
The use of postal codes is so precise that if your next-door neighbour is in a different one, they may pay a lot less — or more — for the same coverage.
“For an actuary, past claims experience is a predictor of future experience,” Thomas says. “You can move across the street and get a different premium.”
Car insurance costs dropping, so are benefits
If your neighbourhood sees a lot of expensive repairs, costly accident benefits and higher than average thefts and break-ins, that is taken into account. The age of your car and its make and model are also important.
How often you drive and where you drive are two more factors. There’s also your demographic group. Newly licensed male drivers statistically have more accidents than newly licensed female drivers. So young males pay more — as we all know. Older drivers who have been licensed for decades tend to have fewer accidents and pay a lot less.
Kanetix has a search tool on its site that uses postal code information to provide average prices of car insurance in Toronto neighbourhoods.
As the accompanying chart shows, if you live downtown in the Christie Pits area, you pay on average $1,479 per car, per year. If you live in the Downsview area, expect to pay 63 per cent more.
Insurance in Brampton and Scarborough tends to be higher than average. Ottawa and communities outside the GTA like Cambridge are lower than average.
Steve Kee with the Insurance Bureau of Canada says you can find your car’s repair cost rating on the Bureau’s website. The list compares 1,500 cars and is called Canadian Loss Experience Automobile Rating (CLEAR).
Kee says the more you drive, the higher the risk of collision, so you may pay more for that. If you commute, carpool, drive to the United States frequently or are the designated driver taking children to team practices, you should tell your insurer, because if something happens you want to make sure the accident is covered.
A long claims-free history will keep premiums down. A common question is what to do about teens: Discourage them from getting a licence or add them to your policy right away?
Insurers look at years driven claims-free. So the longer a teen drives safely, the more quickly the cost of insuring them falls. Speeding tickets and other moving violations may affect premiums. Parking tickets do not.
Consumers can also reduce their costs by changing their coverage. The higher your deductible, the lower your premium. On renewal have a look at these costs and make adjustments as necessary.
I say this often, but shopping around is the best way to keep insurance costs in check. Ontario’s car insurance market is very competitive, with more than 30 players. One insurer’s high claims experience is another’s no-claims sweet spot.
That’s where 2nd Chance Insurance can help- there are insurance companies out there who will offer policies to high risk drivers, and allow them to help rebuild their records as safe drivers. Speak to a professional at 2nd Chance today to get a competitive quote, and start rebuilding your status today! https://2ndchanceautoinsurance.ca/ver2/onlinequote/
Source: Toronto Star