Why Geography Matters When Buying Car Insurance

You probably don't give it much thought, but where you live plays an important role in your auto insurance premium. The Consumers' Association of Canada recently conducted an extensive study of insurance rates in five major Canadian cities and found that rates were largely driven by factors unique to the geography of those cities. 

Busy Cities vs Rural Areas

In general, busy cities cost more than rural areas. Why? Because There's more traffic. That seems to make sense even without any research, but the fact is that there's more incoming and outgoing traffic in a city. With more cars per minute travelling through a defined area, the risk for an auto accident increases across the board. This includes everything from small "fender benders" to major accidents.

The CAC also found that vehicle theft, vandalism, and glass breakage all increase as one gets closer to urban areas. This is, again, due to the increased concentration of vehicles on the road. However, within urban areas, theft rates vary. Public parking lots and apartment garages are notorious for break-ins and vandalism, while residential areas don't see as much action.

In more rural areas, glass breakage seems to increase, but this isn't because of vandalism. Rather, the damage is a result of weather-related activity, mostly ice and storm damage.

Climate

Climate can also drive insurance premiums. Areas more prone to heavy wet weather conditions experience more accidents. Likewise, areas that are prone to more extreme weather in general are also positively correlated with increased accidents.

If you're travelling through an unfamiliar area that is known to have higher incidents of inclement weather (i.e. you're on a holiday), it might be wise to temporarily increase your insurance cover during the trip. If you move to a new location for a job or some other reason, check out the weather trends.

If you get higher than average snowfall, rain, or other weather than the rest of Canada, it might be time to consider more insurance cover to protect yourself and your family. 

Age

Age discrimination is common, according to the CAC. Young people driving in Calgary and Toronto pay more than older drivers, even when the younger drivers have perfect driving records and the older drivers have at least one at-fault crash. Under BC's public auto insurance program, a driver with an at-fault collision is charged more, regardless of his or her age.

This compensates the insurers for the added risk posed by the driver. It also relieves other motorists from having to subsidise risky drivers. However, under the private insurance system that operates in Alberta and Ontario, the CAC found that insurers operated in virtually the opposite manner. 

Gender

The CAC found gender discrimination in cities and areas with open competition. For example, Toronto charges younger male drivers a higher premium than those living in Vancouver. What's more, young males pay more than even young female drivers. This means that the younger drivers are subsidising the older individuals living in these areas.

That's an important consideration if you're thinking of moving. It may benefit you to look to Vancouver, for example, for a job instead of a place like Toronto.

Adam Becker is a serial blogger, writing upon a number of topics from science fiction critique to insurance tips. He eventually finds time away from his writing when prompted by his wife and dog. For information about insurance in Calgary, visit the link.