Within the current boundaries of the City of Toronto, there are 102 postal code groups (first 3 letters) that identify an area or neighbourhood, and can affect the premium you pay for auto insurance. Of all the postal codes, those in Scarborough are the most expensive, with 16 of the 17 Scarborough postal codes paying more than any other part of the city. Meanwhile 8 of 12 postal code groups in Etobicoke pay the lowest rates in the city.
A lot is made about how different cities pay more or less for car insurance, but the fact is that auto insurance prices are not really affected by city you live in. It’s much more specific than that. It’s your postal code. Specifically the first 3 numbers. Within the City of Toronto, there are 102 postal code groups. We used our auto insurance quoting system to run quotes, for an imaginary driver, in each of the groups. Here’s what we found:
When we talk generally about why drivers in a big city like Toronto pay more than people in smaller cities and towns across the province, we tend to focus on population density and volume of traffic. These arguments don’t really hold when comparing different areas of the city.
But the fact is that all rates in the province of Ontario must be approved by the FSRA, and insurance companies submit past claims data to justify future rates. That means that if drivers in your postal code pay more, it’s because drivers in your postal code have made more claims (or costlier claims) in the past. These higher claims costs can be related to traffic conditions in the area, but also to crime, specifically car theft and insurance fraud.
Note that the above rates don’t necessarily reflect what drivers are currently paying. They represent the best rate that one driver would be offered by one of M&W’s insurance company partners at the time of writing. A driver with different circumstances (different age, different driving record etc.) would get completely different rates.
To give you a sense of what an insurance broker sees when you call them for a quote, and what we did to determine what the best price would be for Sharlene in each neighbourhood, here are the actual quotes that we generated for Sharlene with a postal code starting with “M2N” in North York:
|Insurance Company #1||$2,044|
|Insurance Company #2||$2,482|
|Insurance Company #3||$2,543|
|Insurance Company #4||$3,068|
|Insurance Company #5||$3,299|
|Insurance Company #6||$3,495|
|Insurance Company #7||$3,501|
|Insurance Company #8||$3,503|
|Insurance Company #9||$3,520|
|Insurance Company #10||$3,717|
|Insurance Company #11||$4,298|
|Insurance Company #12||$5,426|
|Insurance Company #13||$5,437|
In most cases, customers choose whichever rate is the lowest, but in some instances, if two of the quoted rates are comparable (within $50), we might recommend a slightly more expensive option if that insurer is offering better terms related to accident forgiveness, waiver of depreciation etc.
Most of us are not going to move just to get cheaper car insurance, but if you happen to live in a postal code that’s more expensive than most, there are lots of things you can still do to keep your rate as low as possible.
Want to add to this story? Let us know in comments below! Mitchell & Whale is a fast-growing insurance brokerage in Ontario, striving to make insurance _not suck_ one customer at a time. Give us a call today to discuss any of your insurance needs at 1.800.731.2228.