Why car insurance costs more in Brampton

You can pay several hundred dollars more for car insurance each year because of where you live.

Yes, car insurance companies charge a higher premium if you live in an area with a higher rate of accidents, thefts or vandalism.

Don’t believe me? Just go to a website that lets you compare insurance rates, such as InsuranceHotline.com (owned by Torstar, our parent company).

There’s a reason why the website asks for your postal code on the first page. It’s extremely important in determining your rate.

I used my own postal code in midtown Toronto. Then, I used a postal code in Brampton, a city outside Toronto with a higher accident rate.

I didn’t change anything about the car I drive, my birth date, marital status, desired coverage and claims history. The facts were the same in each search except for the postal code.

Using my own postal code that starts with M4V, I was offered rates starting at $1,051 a year.

Using a Brampton postal code that starts with L6Y, the best rate I could get was $1,312 a year. That’s a difference of $261 – or about 25 per cent.

I was given five quotes by Insurance Hotline. The highest of the five for my own postal code was $1,358, which was $210 lower than the top rate for the Brampton postal code ($1,568).

So, why does this happen? And more important, what can you do about it?

Auto insurance companies have to submit their rates for approval to the Financial Services Commission of Ontario, an arm’s length agency of the provincial government.

Auto insurance rates are generally higher in large urban centres, FSCO says at its website.

This is because there are a greater number of vehicles on the road and the chances of getting into an accident are higher. Also, more vehicles are stolen in urban areas.

Also read:

7 urban myths about auto insurance