Do Car Insurance Companies Check Addresses?

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You bet they do! One of the big factors they use to establish risk is to compare where you live versus how many accidents and insurance claims originate from your neighbourhood. It might not seem fair, but things that happen to other people near where you live play a huge role in the price you pay for car insurance.

How Do Insurance Companies Calculate Car Insurance Premiums?

There are many pieces of information that are blended together to determine how much a driver pays to insure a car. There are general factors, such as how many kilometers a car is driven daily and annually. There are personal factors like the driver’s age, driving experience and driving record. Then there are the general statistical factors, including where you live. If you’re in a city with lots of traffic and lots of congestion, you’ll face a greater risk of having an accident. In a small town, the opposite is true most of the time. However, if the small town is a suburb of a big city, that might not be the case if a lot of your neighbours drive into the big city to work. The accidents that happen to them drive the statistical risk up, costing everyone in the area more in car insurance.

The Impact of Postal Codes

Postal Codes

Consider Brampton. It is notorious for having the highest average car insurance rates in Canada. Ontario itself is, provincially, the most expensive province, and car insurance rates in Toronto are predictably high. However, Brampton eclipses all of Toronto’s most expensive car insurance postal codes. As an outlying suburb of Toronto, residents of Brampton who commute into the city to work have a much longer drive than, say, someone from Mississauga, which is that much closer to Downtown Toronto.

Also, car insurance claims for incidents in the Brampton area are more expensive to settle. While not conclusively proven, it is suspected that Brampton and Peel region are a hotbed of car insurance fraud. Organized groups are thought to be staging accidents then involving complicit tow truck operators, auto body shops and rehabilitation clinics to boost prices and submit fraudulent claims. With higher priced insurance claims, rates in nearby postal codes become hot beds for high insurance costs.

Limiting the Effects of Geography on Car Insurance

While the difference in location may account for $1,000 to $2,000 annually, depending on which postal codes are involved, few people are likely to move on the basis of car insurance costs. However, if you’re trying to choose a location, you can use RateLab’s car insurance calculator to help you determine comparative costs. Simply enter your own car insurance needs into the RateLab calculator on this page, but do it separately for each potential postal code. RateLab will return the lowest price options for each neighbourhood, giving you the information in easy to compare form.

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