Customers are tempted to lie to avoid paying for territorial assessment

Published: May 31, 2018

Updated: July 24, 2018

Author: Luke Jones



We already know that political parties are using auto insurance as a vote grabbing topic for the upcoming Ontario elections. All major parties say they will put an end to territorial ratings, where insurance companies assess premium cost based on address.

Carriers argue territorial ratings are among the best ways for them to determine costs, but the political goodwill from ending them is too hard for politicians to resist. A local broker association says there are some problems with territorial ratings, chiefly the willingness of some motorists to lie about where they live.

Even in the same town, it is possible to pay much less for coverage in one neighbourhood compared to another. This leads to some consumers taking a risk by lying about where they live, so brokers must warn clients to tell the truth.

Joe Carnevale, director of Territory 10 (Metropolitan Toronto and York) for the Insurance Brokers Association of Ontario, says customers could “save a ton of money” by lying, so it is understandable the temptation is there.

Despite insurer protestations, there is a good reason political parties are pushing this pledge… it entices the voter. In Ontario, the Greater Toronto Area is comfortably the most expensive market for insuring a vehicle, it is also the vastly more populated area. In other words, if you live outside the GTA the chances are your coverage will be reasonable against Ontario’s sky-high average.

Killing territorial assessment for premium cost would mean more unity in the price customers pay, no matter where they live. For customers living in rural areas this is bad news, but for the heavy majority in Toronto and surrounding neighbourhoods, it could mean a cut in rates.