Readers puzzled by postal codes and car insurance: Mayers
When Adam Bryk moved from York Mills Rd. and Leslie St. in North York to Danforth and Coxwell Aves. downtown, his car insurance went up $ 300 a year, while his partner’s dropped by $ 40.
Both are the same age, have been licensed drivers for many years and drive older cars – his is a 4-year-old Mazda 3 and hers a Mazda CX7 that is a few years older.
“It’s a mystery,” says Bryk, an accountant. “The only change was the address. You’d think they would both go the same way — up or down.”
When Bryk queried TD Meloche Monnex about the increase, the agent wasn’t interested in information about what exactly had changed. This included going from private indoor parking to street parking and a shorter drive to work.
It was only the neighbourhood that seemed important.
“Needless to say I switched to (my partner’s insurer) and saved a lot.”
Bryk’s new premium with RBC insurance has dropped by $ 100 a year, as opposed to a $ 300 increase proposed by TD. That’s a hefty saving of $ 400.
Bryk’s story is one of several coming out of last week’s column about how insurance companies use postal codes to collect accident and claims benefit data, which is used to determine your annual premium.
His situation is more proof of the importance of shopping around.
Related: Insurer’s fraud effort drives good customer away
Gord Miller had a similar experience.
Miller lives in Trenton and retired in December. For 26 years he drove an hour each way to work, putting between 35,000 and 40,000 km a year on his car. His wife who is self-employed drives a similar amount.
“I had expected big savings when I retired since I’m driving only half as much and hardly ever during bad weather,” Miller said.
“(My wife and I) have been told more than once by insurance companies that one of the biggest factors in premiums was the fact that we were driving a lot of miles.”
Miller was surprised on renewal to see an annual increase of $ 176 in the policy.
“(This is) even though I had no claims, no tickets and am driving the same three-year-old car about half as much as I was,” he says.
“It seems to me that insurance companies are playing some sort of game that has little to do with your driving. Needless to say I am no longer with my old insurance company.
“I have found that you have to change companies every three to five years if you don’t want to be treated like a chump.”
Miller has bundled his car and home insurance with a new company and has reduced his cost by $ 220 a year.
One reader, who worked in the insurance industry in the United States, noted that since 2007 California insurers have been prohibited from using zip codes as a main factor in determining rates.
Ratings must be based primarily on a person’s driving record and miles driven.
“This is something the Ontario insurance regulator should consider,” he said.
A spokesman for the Financial Services Commission of Ontario (FSCO) says a decision on what factors insurers can use to determine your rates is a political one.
Malon Edwards says that FSCO’s mandate is to protect the public interest in the sectors it regulates, including auto insurance. Prohibiting insurers from using one or other measure “requires a legislative or regulatory change that must be proposed and approved by the Ontario government, and is outside of FSCO’s authority,” he added.
The Insurance Bureau of Canada thinks the use of postal codes is the best way to insure the lowest rates for consumers.
“A territory is a good and legitimate predictor of risk,” says IBC’s Celyeste Power. “It doesn’t make sense for people in a lower risk area to pay higher rates (to subsidize) those in higher risk areas.”
In the end there are many actuarial measures that go into the price of insurance. Location is one. You can’t easily change where you live, but with 30 companies competing for your business, you can easily change your insurer.
More columns by Adam MayersEND
Adam Mayers writes about investing and personal finance. Reach him at firstname.lastname@example.org
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