Think you’re paying too much for insurance? Blame your neighbours

If you’re a good driver but not happy with your insurance rates, blame your neighbours and shop around

If you live in Ontario and think you pay too much for auto insurance, what if I told you your biggest problem might be your neighbours?

Kanetix is an online insurance comparison marketplace, and a recently released study shows who is getting dinged the most for car insurance. We all know the factors that go into determining how much you’re going to have to pay: The make and model of car you drive, your driving record, and your prior insurance history. What you may not realize is how much another factor comes into play: Geography.

While Ontario drivers pay an average annual premium of $1,316 (that’s the highest in Canada), for some residents that would be a bargain. Brampton tops out as the most expensive city in Ontario, and therefore Canada, at $2,268. Rounding out the top ten are Vaughan ($1,825), Mississauga ($1,788), Markham ($1,785), Toronto ($1,743), Richmond Hill ($1,709), Ajax ($1,519), Hamilton ($1,497), Pickering ($1,450) and Whitby ($1,399).

Insurance companies use statistics; pure numbers. You can whine and complain all you like, but if you’re driving a car that is involved in a significant number of claims, even if they’re not yours, you’ll pay more. Sometimes it’s due to something like the lack of a good security system – older pickups are notoriously overly represented in the Insurance Bureau of Canada’s top ten most stolen lists because they’re easier to steal. That weighs against you when you go to insure one. Sometimes, it’s that same numbers game just working against you, like with the Chevrolet Cruze: There are so many of them on the road, they’re involved in more payouts.

If you live in a city, or a neighbourhood, that takes more from the system than another one, you will pay. If you live in an area that sports more collisions than average, or is more heavily ticketed, you will pay. Janine White is the vice president of Kanetix, and cautions against making sweeping generalizations against entire cities, however.

“The industry breaks it down even more, by postal code. Parts of Toronto are actually even more expensive than Brampton,” she notes. Some are paying more than Brampton. If your postal code begins with M1S (Agincourt North), you’re paying an average of $2,384 per year. M1V (Milliken), $2,384; M1W (L’Amoreaux), $2384; M1B (Malvern), $2,313; M1X (Rouge), $2,313. You can look at postal code census readings and see how many households (M1B, about 20,000) or how few (M1X, about 3,000) can impact your rates.

To the consternation and frustration of many of those who live in these high zones, it can seem like big savings are only minutes away. The cheapest rates in Toronto? At an estimated $1,437 per year, look to postal codes beginning with M4K (Playter Estates – Danforth), M4P (Mount Pleasant East), M4T, M4W (Rosedale – Moore Park), M4Y, M5B (Church – Yonge Corridor), M5G, M5H, M5K (Bay Street Corridor), and M4G (Leaside – Bennington).

White makes an interesting point about emerging data. Many jurisdictions have been adopting the Vision Zero Safety Plan across Canada and the U.S. The goal is to make streets safer for pedestrians and cyclists, and involves more closely monitoring the interaction between all road users. In many cases, it means dropping speed limits. If a corresponding drop in injuries follows suit, there should be some statistical correlation down the road – and subsequent savings.

She further notes that large discrepancy in annual estimated costs between those Toronto neighbourhoods is often reflected in the amount of time that drivers spend in their cars. Areas that have good access to transit and feature more walkable environments translates into reduced insurance costs.

“In higher cost areas, we have drivers using their vehicle 65 – 75 per cent of the time. In these transit corridors, it’s more like 30-35 per cent.”

So less driving equalling lower rates is great if you can up stakes and move to a cheaper zone, in theory. But what can you do if that isn’t an option?

“People tend to not spend too much time comparison shopping their rates,” explains White. “If you contact 15 different insurance companies, you’ll get 15 different prices.” Rates have to be regulated by the Financial Services Commission of Ontario, but each company will tweak your information by their own set of standards. You might find hundreds of dollars in savings simply by asking around.

White suggests you start with your existing company come renewal, and make sure you’re asking all the right questions before you make a move. If you’re happy with the service but not the price, find out if you have every discount available. Consider installing a black box (telematics, or as I call it, a squeal box) to track your actual usage, make sure you have on winter tires for an additional discount, consider if you can stomach higher deductibles, and see if any organizations you’re part of (work, alma maters) have a group discount.

One word of caution: If you have recent tickets on your abstract, don’t call a new company. Your existing one can pull your driving record at any time (and they do random checks at the very least) but a new company will definitely pull your file – and see what you’ve been up to. Sometimes, silence is more golden than squawking.

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One response to Think you’re paying too much for insurance? Blame your neighbours

  1. Pat says:

    I recently bought a 2008 Bullit Mustang. The insurance rate for it is almost double my Honda Ridgeline, which is worth more. The problem is that other people, I.E. young drunk punks, crash Mustangs and speed in them, a lot. I have a spotless driving record, but to no avail.

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