Auto Insurance

Does Your Postal Code Affect Your Car Insurance Rates? You Bet It Does!

By: Thomas Sigsworth on August 22, 2013
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We all know that auto insurers use factors such as your driving record, age and vehicle type to calculate your premiums. What some Canadians don’t appreciate is how much their postal code affects their rate as well.

Your address, it turns out, is a big part of your insurance quote.

Not convinced? Go to an insurance comparison site to see for yourself. You can do it right here at

Put in your information, including your postal code, and get a quote. Then pick another postal code – maybe one of a friend, family member or your place of work, etc. – and get the rates again. You may be shocked by the result. Many Canadians who conduct this simple postal code experiment find the rates can change by hundreds of dollars per year!

So, what explains the wild variation? Well, the area where you live plays a big part in how risky your car is to insure. Places with higher rates of accidents, theft and vandalism will typically see higher insurance premiums, because insurers incorporate these location-specific risk factors into the quote. If the drivers registered in your postal code have made substantially more claims than those in the neighbouring postal code, chances are that this will be reflected by a disparity in the premiums charged by insurers.

Now, does it make sense to put the house up for sale and move halfway across town to save a few hundred bucks a year on auto insurance? Probably not – but it’s at least worth looking into if you’re thinking of moving soon or are on a tight budget. Student drivers, who tend to move around a lot anyway and who often have to make every dollar count, should pay particular attention to how postal codes can affect auto insurance rates.

Perhaps an even bigger takeaway is that it’s important to compare insurance quotes from a range of different providers. Only by shopping around will you know you’re getting a good deal. You’ll also better understand some of the weird quirks – like postal codes – that can have a big impact on your auto insurance premiums.