Why moving to a new postal code can impact your insurance rate

You don’t need to travel across provincial borders to get hit with a rate hike

Content article

Car insurance rates can vary significantly according to where you live. The reason is that certain areas are associated with higher instances of collisions and pose more risk to your vehicle than others, which results in increased claims – and therefore, higher premiums.

Advertisement 2

Content article

But you don’t need to travel across provincial borders to get hit with a rate hike – simply moving to a new city or neighborhood within the same city can impact what you pay for car insurance.

In fact, sometimes you don’t even have to physically move. Such was the case for this Ontario resident, who had his postal code changed on him by Canada Post and faced a steeper insurance premium as a result.

Here are some of the reasons why a new postal code can bump up your premium.

Local traffic patterns

If you move to an area that experiences heavy traffic, is near a busy intersection, and densely packed with pedestrians, chances are there are higher claims rates, too. Naturally, your insurance provider will charge you a higher premium to compensate for the added risk they assume.

Advertisement 3

Content article

Population density

You can expect to pay a higher premium if you move from a sparsely populated rural community to the downtown core of a crowded city like Toronto.

This can happen for a few reasons, including the fact that accidents in urban locations tend to occur more often due to higher population density (though fatalities are more prevalent in the countryside). Theft rates may also be higher in urban centers, which could bump up your premium.

Number of claims in your area

Suppose you live in an area with an exceptionally high frequency of insurance claims. In that case, you can anticipate your annual premium to rise, even if you’re a responsible and attentive driver without a single infraction to your name.

If this practice strikes you as unfair, you’re not alone. Certain jurisdictions have introduced legislation to ban insurance companies from saddling drivers with higher premiums due to the number of claims originating from their postal code.

Advertisement 4

Content article

Vehicle parking

Does your new home lack an enclosed garage, private driveway, or underground parking lot, leaving you with no choice but to park your vehicle outside on the street? If so, you could pay more for your insurance policy.

Parking your car on the street leaves it vulnerable to thieves and exposed to extreme weather, which can lead to damage your insurance provider must cover.


If you move to a neighborhood that’s rife with car theft and vandalism, you’ll probably pay more for car insurance. This is especially true if you own a make and model of vehicle that thieves routinely target.

To get a sense of how your neighborhood fares regarding crime rates, you can browse an online crime mapping application, such as the one provided by the Vancouver Police Department.

Advertisement 5

Content article


In 2020, environmental factors directly contributed to 21 percent of traffic collisions in Canada, according to Statistics Canada.

Harsh weather resulting from snow, hail, and rain can bring about treacherous road conditions, increasing the risk of an accident. Some locations are also prone to flooding, destructive winds, and wildfires, all of which can cause severe damage to your vehicle and result in you having to make a claim.

How to avoid a rate increase when you move to a new postal code

Depending on the risk profile of your new residence, a hike in your annual premium may be inevitable. Still, you can take action to ensure you pay the least amount possible.

One of the first things you should do is compare car insurance rates online to see if you can secure a better price with a different insurance company. Not every insurance provider pays out the same amount in claims in a given area. One might pay out a lot of claims in your postal code, while another might not, and can offer you a lower rate because of it.

Advertisement 6

Content article

If you live in a crime-ridden area, consider installing a security device in your car to deter thieves, which could earn you a discount on your premium.

Do you possess an impeccable driving record but live in a high-risk area? Then, you may want to switch to usage-based insurancewhich utilizes telematics to monitor your day-to-day driving patterns and can earn you a discount of up to 30 percent on your premium.

And, of course, putting winter tires on your car when the temperature drops will net you a discount, too.

Whatever tactics you employ, be sure to explore all your options to find the car insurance policy that best suits your needs and budget.

LowestRates.ca is a free and independent rate comparison website that allows Canadians to compare rates from 75+ providers for various financial products, such as auto and home insurance, mortgages, and credit cards.


Postmedia is committed to maintaining a lively but civil forum for discussion and encourages all readers to share their views on our articles. Comments may take up to an hour for moderation before appearing on the site. We ask you to keep your comments relevant and respectful. We have enabled email notifications — you will now receive an email if you receive a reply to your comment, there is an update to a comment thread you follow or if a user you follow comments. Visit our Community Guidelines for more information and details on how to adjust your email settings.

Leave a Comment