Customer pays $600 more for car insurance after moving 4km

Published: August 25, 2016

Updated: July 24, 2018

Author: Luke Jones



The interesting and somewhat hilarious story of one Toronto resident highlights how auto insurance companies calculate premiums based on location. Sometimes the system is so rigid that it can result in savings or paying a lot more for coverage, through the space of a few blocks.

A report in The Star tells how Anita Dermer found out her auto insurance premiums would increase considerably after she moved from North York to Scarborough. The highlight of the situation is that she actually only moved five minutes (4 kilometers) from her previous location. Still, for this small location change, the premium for her 2003 Honda Acura increased by $600 a year.

That is a huge increase considering the Greater Toronto Area is home to the highest car insurance rates in Canada. While other factors can affect a premium, such as driver record, the location change was the only differing factor in Dermer’s case. She told The Star that “it seemed blatantly unfair.”

The situation shines a spotlight on how insurance providers calculate car insurance based on location. Again, other factors like driving record are included, but even a simple location change can have a profound impact on how much you pay to get your vehicle covered.

Dermer’s situation has a thick vein or irony running through it. While the insurer gave her a more affordable premium while she live in North York, her vehicle was in Scarborough for much of the time. It was where she worked, studied, and where her parents live.

Indeed, this calculation on location is not actually something the insurance company decided on a per-customer basis. It is an automatic process that the company’s systems will use to assess a customer for a premium. In some cases, such as this, it throws up situations that are almost funny. Indeed, neighbors on the same street could be paying different premiums if they happen to have different postcodes, even if all other criteria was equal.