Why moving to a new postcode can impact your insurance premium

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Car insurance rates can vary widely depending on where you live. The reason for this is that certain areas are associated with higher instances of collisions and pose more risk to your vehicle than others, leading to increased claims – and therefore higher premiums.

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But you don’t have to cross provincial borders to be affected by a rate hike – just move to a new city or neighborhood in the same city can impact what you pay for auto insurance.

In fact, sometimes you don’t even have to physically move. Such was the case for that resident of Ontario, who had their postal code changed by Canada Post and faces a higher insurance premium as a result.

Here are some of the reasons a new postcode can increase your premium.

Local traffic patterns

If you’re moving to a high-traffic area near a busy intersection that’s densely populated with pedestrians, chances are that loss rates will also be higher. Naturally, your insurer will charge you a higher premium to compensate for the additional risk they assume.

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Population density

You can expect to pay a higher premium if you move from a sparsely populated rural community to the downtown core of a crowded city like Toronto.

This can happen for several reasons, including the fact that accidents in urban areas tend to happen more often due to higher population density (although deaths are more common in the countryside). Theft rates may also be higher in urban centers, which could drive up your premium.

Number of claims in your area

Suppose you live in an area where the frequency of insurance claims is exceptionally high. In this case, you can expect your annual premium to increase, even if you are a responsible and attentive driver without a single violation on your behalf.

If this practice seems unfair to you, you are not alone. Some jurisdictions have introduced legislation prohibit insurance companies from charging drivers higher premiums because of the number of claims coming from their postal code.

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Vehicle parking

Does your new home lack an enclosed garage, private driveway, or underground parking, leaving you with no choice but to park your vehicle outside on the street? If so, you might pay more for your insurance policy.

Parking your car on the street leaves it vulnerable to thieves and exposed to extreme weather conditions, which can lead to damage that your insurer must cover.

criminality

If you’re moving to an area prone to car theft and vandalism, you’ll likely pay more for car insurance. This is especially true if you own a make and model of vehicle that thieves regularly target.

To get an idea of ​​where your neighborhood is in terms of crime rates, you can browse an online crime mapping application, such as the one provided by the Vancouver Police Department.

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In 2020, environmental factors directly contributed to 21% of traffic collisions in Canada, according to Statistics Canada.

Severe weather conditions resulting from snow, hail and rain can lead to dangerous road conditions, increasing the risk of an accident. Some locations are also prone to flooding, damaging winds, and wildfires, all of which can cause serious damage to your vehicle and require you to file a claim.

How to avoid a rate increase when changing postcodes

Depending on the risk profile of your new residence, an increase in your annual premium may be unavoidable. Still, there are steps you can take to ensure you pay as little as possible.

One of the first things you should do is compare auto insurance rates online to see if you can get a better price from another insurance company. All insurers do not pay the same amount in claims in a given area. One may pay a lot of claims in your zip code, while another may not, and may offer you a lower rate because of it.

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If you live in a crime area, consider installing a security device in your car to deter thieves, which could earn you a discount on your premium.

Do you have an impeccable driving record but live in a high-risk area? Then you might want to jump to usage-based insurancewhich uses telematics to monitor your daily driving habits and can earn you up to 30% off your premium.

And, of course, putting winter tires on your car when the temperature drops will also earn you a discount.

Whatever tactic you employ, be sure to explore all of your options to find the auto insurance policy that best suits your needs and budget.

LowestRates.ca is a free, independent rate comparison website that allows Canadians to compare rates from over 75 providers for various financial products, such as home and auto insurance, mortgages and credit cards.