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Does my postal code affect the cost of my insurance?

By SmartCoverage Team on January 29th, 2018

Did you know that your postal code affects your insurance? It’s weird but it’s true. Depending on where you live, your auto and property insurance rates vary slightly. Below, we put four Greater Toronto Area postal codes to the test to see how different our quotes would be.

What your postal code means for insurance providers

Your postal code betrays your neighbourhood, and the area you live in is associated with a myriad of things such as:

  • Car theft
  • Break and enters
  • Car collisions
  • Bike lanes
  • School zones
  • Vandalism
  • Construction
  • Population density
  • Traffic
  • General crime

Insurance companies look at how many claims are filed per postal code, and set rates according to your risk. Your location matters, a lot!

We put Toronto area postal codes to the test for both auto and property insurance. What's the first thing you'll be asked before you get an insurance quote? You'll be asked to provide your postal code, of course.

Test parameters

We used a tester-dummy named Wendy, who we made as low-risk as possible. Next, we used various quoter tools on the internet to see how different our auto insurance results would be if we kept the individual the same, but changed her location. We only did each test once to see what numbers we would get; it would definitely change if you decided to shop around. Check it out below.

Auto insurance test

For the auto-test, we gave Wendy Williams 45 years of age, a perfect driving history, a new Honda Civic four-door, a wedding ring, winter tires, and low mileage needs. We didn’t give her any comprehensive or collision coverage nor did we consent to a credit check.

North GTA (North York)

Yonge St. and Finch Ave E., M2M 4L9

Smart Coverage top quote: $92.75/month or $1,113/year

West GTA (Etobicoke)

The Queensway and Kipling Ave, M8Z 1S1

Smart Coverage top quote: $84.17/month or $1,010/year

South GTA (Downtown)

Spadina Ave and Lakeshore Blvd W., M5J 2G8

Smart Coverage top quote: $78.58/month or $943/year

East GTA (Scarborough)

Brimley Rd. and Lawrence Ave E., M1J 1C9

Smart Coverage top quote: $339.33/month or $4,072/year

Results

As you can see, there's quite a difference in Wendy's top quotes. One person might think that living downtown increases your auto insurance, seeing as there's usually a higher propensity for crime and vandalism, but Scarborough actually has the most expensive rate here. Perhaps it's all the commuting, multi-lane traffic and car collisions reported in Scartown that makes their quote over 3x higher in some cases. Harsh!

Property test

Next, Wendy needed some renters insurance, of course! Keep in mind that renters insurance is the cheapest form of property insurance in most cases. Toronto is one of the most expensive cities for property insurance in Canada for a variety of reasons, but renters insurance is usually affordable wherever you reside.

We gave Wendy a high-rise apartment in a concrete building that was only about 20 years old in four different parts of the city. We ran into a tiny roadblock with the initial quote tool we were using and had to switch it up for this one.  We still got relatively different quotes.

North GTA (North York)

Yonge St. and Finch Ave E., M2M 4L9

Top quote: $16.33/month or $196/year,

West GTA (Etobicoke)

The Queensway and Kipling Ave, M8Z 1S1

Top quote: $15.08/month or $181/year

South GTA (Downtown)

Spadina Ave and Lakeshore Blvd W., M5J 2G8

Top quote: $18.08/month or $217/year

East GTA (Scarborough)

Brimley Rd. and Lawrence Ave E., M1J 1C9

Top quote: $18.25/month or $219/year

Results

The variance for renters insurance is about $40 for the year based on postal code. In this case, Scarborough and Downtown were quoted essentially on par. The older buildings in both locations likely influenced similar rates. The more safety features you have in or around your dwelling, the better insurance rate you'll get. 
 
If you do live in one of these "riskier" neighbourhoods, it's even more important to get yourself some property protection. The higher rates reflect how often your neighbourhood files insurance claims, so don't get caught without it.
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