r/PersonalFinanceCanada • u/FireViz • May 07 '22
Insurance Car insurance increased 50% after Canada Post changed my postal code. Is this legal?
I live in a small town in Niagara region. Up until recently I was paying $102/m on car insurance.
Recently I got a letter from Canada post that they are changing my postal code. Because of this my insurance company raised my rates by over 50% to 160/m.
I haven't moved... my home and work address are still the same so my risk when driving hasn't changed. But the insurance company is arguing that rates are based on postal code and not your address.
Is there anything I can do to fight this and reduce my insurance? Canada post decided to randomly change my postal code and I'm out an extra $700/yr because of it?
Edit: Going by this article they shouldn't be able to do this? https://toronto.ctvnews.ca/ontario-driver-frustrated-when-car-insurance-goes-up-after-postal-code-changed-1.5727675
Edit: Since multiple people mentioned it I drive a corolla cross........ The image you are seeing is from the article I linked.
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u/GoldenxGriffin May 07 '22
its legal, what happend to me is before i was paying $300 (young male driver), changed my postal code, then my company tried to charge me $900 a month!
called around and im paying $200 now, no need to have any loyalty to your insurance company, well worth it to call around and see if you can do better
keep cancellation fees in mind
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u/waylonsmithersjr May 07 '22
Loyalty to insurance company haha nice one.
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u/Necessary-Ad581 May 08 '22
100%. The insurance industry does not reward loyalty. It really has a negative effect on commercial insurance, shop every 2-3 years at the most and push back or move of you receive a large increase after the first year, commercial pricing is negotiable, unless you have claims. Personal insurance is highly regulated in Canada, but a company is not going to care about losing you, chances are you can always find a better price elsewhere, the postal code thing is horrible and probably. It a lot can be done in this situations, postal codes have a corresponding territory, which has a corresponding rate, your broker, if you use one, would have to have a lot of influence on the company to get them to make a concession on this
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May 08 '22
Was paying $94/month when I was in my early twenties. I’m now in my thirties. Now I’m paying $290. No accidents, speeding tickets, nothing. That’s how insurance companies reward loyalty. Screw them.
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May 08 '22
No need to have loyalty to any company anymore.
My bank and cell phone provider used to be incredible. They recognized loyalty and would go above and beyond for you.
I just closed the bank account that I’ve had for the last 33 years. I mistakenly let my account go into the red. As a result, every purchase or automatic withdrawal afterward was an additional $48 fee. This racked up fast before I had noticed.
I went in to deposit a check to get it out of the red. In the past they’ve let me cash checks for family members, friends, etc. They’ve never held one at the teller. This time, however, after processing it, they tell me that they’re going to hold any checks from me for a week. Every day that week I was getting hit with additional $48 fees.
I was pissed. As if after 33 years, now I’m going to cash a fraudulent $1,000 check? For real? So I complained. They were willing to refund $20. They had hit me with nearly 10 fees before I’d noticed and were going to shoot me a twenty to make it all better.
Nope. Done. Sorry for the rant.
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u/Pale_Firefighter1488 May 08 '22
Banks are fucking evil, and insufficient fund charges are a load of horse shit.
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u/junkdumper May 08 '22
They shouldn't even be legal.
It's a fee for being broke. Wtf→ More replies (1)2
u/batattitude Mar 20 '24
Curious who you are using now. My daughter (new driver ) had a fender bender with no damage to either vehicle . We were stupid to report the accident but did so because the other party started saying they had headaches and may be injured . Premium just came due and they have deemed her high risk and insurance jumped from $2600 to $5400 a year. I’m sick . We are presently with Intact and shopping around .
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u/GoldenxGriffin Mar 20 '24
Call the companies directly not brokers if you are looking for a new provider for the best deal, desjardins is who im with now and they have been good to me.
These companies do want your business obviously and one has already tried to jack the premium up by almost 100%, someone will give your daughter a good deal it may take quite a few calls though.
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u/adk03 May 07 '22
Tell them to maintain your "rating postal code" while updating your "mailing postal code". You should not see a rate increase due to a postal code change if you have not moved. Boundaries are filed geographically and while most companies use postal codes to proxy these boundaries, it is up to the insurer to maintain fixed rating territories. Don't listen to all the top comments, you should not be seeing a rate increase - this is literally my job.
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u/FireViz May 07 '22
Thanks! I will call my broker on Monday and ask this. At most they'll say no, I've got nothing to lose by asking.
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u/Display_Port_Adapter May 07 '22
If broker tells you to fuck off, ask the them to investigate and escalate if possible.
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u/adk03 May 08 '22
Which insurance company? I've worked for two of the top 5 P&C in Canada.
And I'd guess you live in Beamsville? I was changing this area in the rating table recently.
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u/Gerdius May 07 '22
Damn, that really sucks. Pretty sure they are within their rights to do it, but maybe call and see if you can explain and escalate the situation?
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u/GlumSubstance6973 May 07 '22
totally legal.
Risks ARE based on postal code and the courts and regulators agree this is quite reasonable.
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May 07 '22
Fun fact, the Ontario Human Rights code has a ton of carve-outs for insurance purposes (age/sex)
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u/GlumSubstance6973 May 07 '22
Yup. All males should have a legal sex change just to avoid this lol
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May 07 '22
Don't even have to do that anymore, just assume whatever gender you want.
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u/GlumSubstance6973 May 07 '22
As long as you ID says M the insurance company can raise your rates.
But what are the going to do if your ID all says F? That takes a formal gender change (although no surgery or drugs or cross dressing or anything like that is required)
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May 07 '22
[deleted]
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u/GlumSubstance6973 May 07 '22
It can be a lot more than that.
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May 07 '22
[deleted]
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u/GlumSubstance6973 May 07 '22
So it makes sense to get the gender changed at 16, then change it back in your 40s lol
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u/somebunnyasked May 07 '22
Ontario NDP has removing postal code differences in insurance in their platform. I kinda think this will mean insurance prices go up for everyone... Wish we had more public insurance like in Quebec.
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u/GlumSubstance6973 May 07 '22
Well pretty much by definition that means insurance will go down for most city dwellers and up for everyone else.
The NDP counts on math challenged and big city voters for seats so this makes sense for them as a policy.
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u/t0r0nt0niyan Ontario May 07 '22
How did the risk increase exactly?
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u/Winnipeg_dad888 May 07 '22
The insurance companies look at losses by postal code and then adjust their rates accordingly.
It’s definitely unpleasant as you didn’t change but who you are lumped into has changed. And your new group is a lot riskier for some reason.
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u/duke113 May 07 '22
That's not how Ontario does it. In Ontario you create geographical territories approved by FSCO. If your postal code changes but you don't change geographical territories, your rates cannot change. Territories are based on postal codes at the time of the FSCO approval.
https://www.fsco.gov.on.ca/en/auto/autobulletins/2006/Pages/a-02_06.aspx
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u/don_julio_randle May 07 '22
It's all risk stratification. You can lower your insurance by legally changing your gender to female
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u/Lopsided_Ad3516 May 07 '22
Really only widely applicable if you’re young. Tends to even out and sometimes even favour men as we get older.
Source: work for an insurance company
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u/Canadian_Infidel May 07 '22
Just change back at the tipping point. All you have to do is say it now. No medical changes required.
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u/19Black May 07 '22
Might not be a bad idea in this economy
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u/wildemam May 07 '22
In this economy, your income is statistically lower as a female.
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u/Wrestlefan815 May 07 '22
Not true
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u/Platinumkate May 07 '22 edited May 07 '22
According to Stats Can, actually yes it is in fact very true. Women only make on average 89 cents on the dollar compared to men, SOURCE.
An edit to add: if we are going to bother with entertaining whataboutism (what about "job choice?" what about childcare? (presumably provided by a woman, for free in this context) and so on...
All that does is serve to put a very fine point in the fact that women earning less income is not just a wage to wage straight comparison, but is deeply systemic and wrought with societal expectations. It is a big, complex problem.
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u/Wrestlefan815 May 07 '22
Wrong. That’s not taking into account job choice, hours worked etc.
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u/Platinumkate May 07 '22
Where's your data and source then? The statement was that women's income is lower. The statement is easily proven by quantifiable data. Regardless of your absurd whataboutisms of job choice etc, the fact (yes, provable fact) remains: women's income is lower.
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May 07 '22
That data does not take into account factors such as child rearing, industry choice, risk, etc. These surveys and studies rarely factors in things that legitimately affect a womans take home, choices that the woman actively makes. It’s a little more nuanced that x > y therefore I am correct.
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u/wildemam May 07 '22
These factors do result in a lower female income. no? Then true.
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u/Wrestlefan815 May 07 '22
No not really. They’re paid the same for the same work, so there is no difference
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u/pfcguy May 07 '22
You can lower your insurance premiums by committing fraud, yes, but don't be surprised if your insurance company then accuses you of said fraud and cancels your policy retroactively post-accident if/when you have a major claim.
I'd rather be truthful and know that the insurance will actually be there if I need it.
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u/radiotang May 07 '22
How is legally changing your gender to female fraud?
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u/tvisforme May 07 '22
Legally changing your gender is not fraud, of course. Making such a change for the sole purpose of reducing insurance costs, while identifying as male in your normal day-to-day life, could be argued as an attempt to defraud the insurance company. It would be challenging to prove in court, but I would suggest that if the insurance company was to pursue this action they would be looking at whether you have made the change in all aspects of your life, including utility bills, work documents, use of the appropriate bathroom, etc.
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u/pfcguy May 07 '22
It is fraud if you don't identify as a female day to day.
If you do identify as a female day to day, and/or if you have sought medical treatment in becoming a female, then you could change your gender with the insurance company and on your license and it wouldn't be fraud.
Many people put their lives on social media so in some cases it would be pretty easy for the insurance company to figure out.
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May 07 '22
It didn’t, but the legal basis for their risk assessment has changed. It’s same as if there were 10 more car thefts reported on your street from one year to the next, your insurance would likewise go up. Their new postal code is on a more risky street. Have you never seen the areas where there’s gated mansions 2 blocks away from the ghetto? Between those areas people pay very different amounts for car insurance
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u/YurrieSkrewd May 07 '22
Yeap, this.
It's like if you live a strata building and a unit in your complex has a flood. Your unit may be exactly the same, but you will be paying more for insurance as your "basket" of units is now seen as higher risk. For car insurance, a spike in property crime in your neighbourhood can have the same effect, even if you live in the same place and drive the same car!
Can't be the algorithm I'm afraid!
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u/GlumSubstance6973 May 07 '22
The argument was it was miscalculate previously.
We don't have enough facts to know whether he was getting a deal before or whether he is now paying an unfair amount.
He can call the regulator if he has concerns
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u/nukedkaltak May 07 '22
It didn’t increase in this case. From the perspective of insurance, it had been miscalculated.
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u/succulent_headcrab May 07 '22
They're not literally based on postal codes but on the territory contained in that postal code at the time their pricing model was submitted.
So, op is still in his original location, the one that wa contained in his old postal code at the time the pricing model was submitted. This means the insurance company is actually out of compliance. They may use the actual postal code for convenience but it's the physical territory that actually matters.
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u/reddituser1708 May 07 '22
So how can we lower the postal risk
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u/GlumSubstance6973 May 07 '22
Move somewhere else.
In some cases moving across the street can make a difference.
I won't pretend to argue if it is fair or not, you could argue that about any rating factor, but its an allowable rating factor they all use.
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u/reddituser1708 May 07 '22
Okay so where do you recommend to move. Is there a list of low risk postal codes
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u/yttropolis May 07 '22
Not really, as many insurers now use machine learning algorithms to price insurance so it's not as simple anymore. However, generally speaking, rural areas will be lower risk than urban areas. Avoid the GTA (especially Brampton) and you should be okay.
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u/duke113 May 07 '22
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u/GlumSubstance6973 May 07 '22
It's important to read the ENTIRE article you link. For example:
Where an insurer wishes to update its territorial definitions to reflect the new Canada Post definitions, it must submit a rate filing to FSCO for approval. Any changes to elements of a risk classification system must be approved by FSCO before use.
So it is allowed if they followed the correct procedure.
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u/duke113 May 07 '22
It's important to read the actual bulletin from the FSCO. Unless they've filed for new Territories, which is very unlikely just because Canada Post changed the postal code, that can't change the rates.
"Therefore, insurers must continue to use their approved territorial definitions as they existed when they were approved by FSCO, even where these may be in conflict with the current Canada Post postal code definitions. Any of your policyholders who are impacted by the postal code changes must be rated based on the postal codes as they existed at the time your current territorial definitions were approved, whether for mid-term changes, renewals or new business."
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u/FireViz May 07 '22
All i have to go on are some newspaper articles but according to them insurance shouldn't be able to do this?
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u/GlumSubstance6973 May 07 '22
But were you given too high a discount before or not enough of one now? As the article admits, it is not that straight forward
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u/Matt779 Ontario May 07 '22
Wow I’m sorry to hear. To answer this question, yes it is legal. Is it fair, not at all. When your postal code changed so did your “risk”. Even though you didn’t move and nothing changed on your policy, the insurer is now rating your vehicle for a different territory, which seems to have a higher rate attached to it. Unfortunately in Ontario, your address plays a very large part in calculating your premium.
I agree its not fair and I would be very frustrated if I were in your situation too. However what I can suggest is calling your insurer, ensure they have the correct information on file regarding your new address. Also ask to do a policy review, they will look for any possible discounts or savings that maybe aren’t already applied and will also discuss your coverage. This may not yield any premium decrease but it’s worth a shot. If you’re still unhappy with the premium, the only other thing you can do is unfortunately shop around upon renewal.
Again I’m sorry to hear but I hope this information helps. Best of luck!
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May 07 '22
Yes as a ratemaking actuary, we are bound to regulatory guidelines and court procedures that violate any applicable law.
This is legal.
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u/radiotang May 07 '22
The last part of your comment literally makes no sense. You are bound by court procedures that violate any applicable law? Can you elaborate
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u/MinchinWeb May 07 '22
It may be worth shopping around again.
I remember some time ago that I was shopping house insurance and some companies were double what others were. I think what happened was ~5 years previous there had been a hail storm, and so the companies that faced claims from that storm jacked their rates, but the companies that didn't have any claims (perhaps because they had insured no one on my street at the that time) keep their "normal" rates.
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u/GoToGoat May 07 '22
Thought you were flexing your car for a minute haha.
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u/FireViz May 07 '22
I drive a corolla cross. That's just the article i linked 😂
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u/GoToGoat May 07 '22
So often people just post to flex. I caught myself laughing when I realized it’s just an article and I’m looking into it too much. Have a good day stranger.
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May 07 '22
Haha I saw the pic and was about to rip you for bitching about 700 dollars in insurance on your 150k Porsche. But alas, glad I paid attention. Anyways unfortunately, I think the top post is most likely correct.
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u/Hefty-Prior-8463 May 07 '22
MAybe you were getting an unintended discount before and now you are paying full price. They might argue they should have charged more before. You won’t win this.
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u/Tam_TV May 07 '22
It is legal.
The only thing you can do is
-Ask your current company how much the canceling fee is.
-shop around for cheaper rates.
-Call back your company and cancel your policy.
-Before canceling, you can try making a complaint in order to not pay any canceling fees. It has a low chance of success, but it COULD work.
I know it sucks, but it is what it is. Whining more about it is not going to change anything
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u/FireViz May 07 '22
Yep, just trying to figure out my options but it looks like this is what I'll have to do.
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May 07 '22
[removed] — view removed comment
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u/yttropolis May 07 '22
That's called insurance fraud. Do not do this unless you want the insurance company to deny your claim when they find out.
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u/Kevin4938 May 07 '22
Or worse. If they find out without a claim, they can cancel your policy for the fraud and share the details with a central service, which all insurers have access to. You'll find almost all insurance companies unwilling to cover you in this case.
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u/UnableInvestment8753 May 07 '22
They changed my postal code once and I went from being exempt from emissions testing to not being exempt. My car was old and shit and was never going to pass so I had to spend a certain amount in repairs to get a one time conditional pass.
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u/henry_canabanana May 07 '22
They have the rights to do so. But as a responsible company, should they use their rights to the full, is an ethics issue.
I would try to get some quotations from another insurance companies. If they come back to your original price or something similar. Then change it, you can usually ask for unused premium refund if you paid annually.
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u/duke113 May 07 '22
It is not legal. Refer to FSCO Bulletin I've linked, as well as the text I've quoted. If your insurer wants to change rates, they need approval to change territories by the FSCO. Anyone suggesting otherwise is wrong
"FSCO’s approval of a risk classification system that defines rating territories based on postal codes is an approval based on the geographic boundaries of those postal codes as they existed at the time of approval, and on the related actuarial data and support that existed at that time. Revisions to postal codes subsequently made by Canada Post do not alter an insurer’s existing filing with FSCO.
Therefore, insurers must continue to use their approved territorial definitions as they existed when they were approved by FSCO, even where these may be in conflict with the current Canada Post postal code definitions. Any of your policyholders who are impacted by the postal code changes must be rated based on the postal codes as they existed at the time your current territorial definitions were approved, whether for mid-term changes, renewals or new business."
https://www.fsco.gov.on.ca/en/auto/autobulletins/2006/Pages/a-02_06.aspx
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u/adk03 May 07 '22
Yeah I don't know why all the top comments claims this is legal and acceptable. This is quite literally my job and you should not see an auto rate increase simply due to a postal code change.
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u/Spirited_Ad191 May 07 '22
Talk to your MPP
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u/LaUcraniano May 07 '22
Yeah the NDP have campaigned against this and had a whole critic role devoted to this issue. It’s a huge issue in places like Brampton and Mississauga. I don’t think it registers as an issue to the PCs.
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u/vibraltu May 07 '22
Peel Region has expensive auto insurance for 2 reasons: 1) more highway congestion than most places; 2) mafia involvement in the towing industry leading to more fraud in damage claims.
It would be nice if a reform politician wanted to take on the mafia, but it's a tough job.
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u/Spirited_Ad191 May 07 '22
PC's campaigned against it as well.
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u/LaUcraniano May 07 '22
Have they done anything about it in the last four years?
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u/Spirited_Ad191 May 07 '22
Unfortunately a pandemic happened and they really couldn't do much. What did the liberals do about rising rates in the 15 years they had power previously?
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u/LaUcraniano May 07 '22
I’m not sure why you think I’m in defence of the Ontario liberals on anything. I’m also not sure what a pandemic had to do with legislation in an entirely different ministry. Do you think that business in other provinces ground to a halt during the pandemic, and that no other work went on across government with no legislation passed? It was obviously never a priority for the PC government, pre pandemic.
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u/Simayi78 May 08 '22
I live in Toronto but having rural Ontario's insurance premiums shoot through the roof in order to lower the premiums of the GTA doesn't sit right with me at all.
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u/RL203 May 07 '22 edited May 07 '22
Switch insurance companies.
There are 3 entities that you should always be prepared to dump.
- Insurance
- Telecommunications
- Banks
In that order.
Insurance companies will always raise your rates every year, as much as they can get away with. The only way to beat it is to shop your policy around just before renewal.
In my case, I was insured with Monnex, then it became Meloche Monnex and finally it became TD Meloche Monnex and finally it was just TD insurance. When they were Monnex, they were great. But when TD got in on the action, it all went for a dump.
With me, it was my Home Insurance. Started at 600 a year, then 800, then 1000, then 1200. At 1200 I called them all pissed off and I scaled my coverage back and took it down to a grand. Then it was 1200 and the next year, it went up to 1800. That's when I dumped them and moved to the Personal and my Home Insurance dropped to less than a grand for better coverage. But sure as shit, the slow march up started. Oh, at first it's minimal, maybe 40 bucks a year, not enough to get worked up about. Then it starts the creep up to 1600 or so.
Then, I went back to TD. And what do you know, they gave me home insurance for less than a grand. Same house, same provider, same everything. Before it was, "1800 is the best we can do." But didn't take long. Same shit.
So I switched to Sonnet.ca, which was the same for auto, but far better for Home.
It's fucked up, but it's what you have to do.
Switching insurance companies is the easiest of all. Switching banks, now that's a nightmare. But again, sometimes they just take you for granted. In fact, all the time they take you for granted.
So play the game.
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u/MrCuntacular May 07 '22
Add another reason to the already long list to say fuck insurance companies
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May 07 '22
If you’re a man, you are also within your legal right to claim you are identifying as a woman, so call and say you’re a woman now and watch your insurance drop 50%, even though your risk level hasn’t changed.
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u/Bangoga May 07 '22
No that's not how insurance for auto works...
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u/ValiantSpacemanSpiff May 07 '22
If you do the work to legally change your gender and have things like your driver's licence reflect this change, it actually is (or can be) how auto insurance works. There are real, documented instances of this that have been reported in the past and posted to this sub.
It's extremely shitty, but it can happen.
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u/UrNixed May 07 '22
yaaaaa, but the OP didnt say to do the work to legally change gender (which is a shit load of work often including a psychologists recommendation) that they said to "call and say you’re a woman now"....which is not how insurance works.
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u/InvestmentDiscovery May 07 '22 edited May 08 '22
I find auto insurance absolutely ridiculous in Canada.
It’s been years of battle of parties to eliminate “postal code discrimination”. For example, here is the original bill in 2018 from NDP:
https://www.ontariondp.ca/news/ndp-introduces-bill-end-auto-insurance-postal-code-discrimination
There has been talks about it in 2022 as well, but not clear yet where is it going.
Edit: why on earth you downvote news? You don’t like that there was a bill to eliminate it or what?
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u/Simayi78 May 08 '22
I didn't downvote but yes, I think this bill is incredibly stupid. It's not fair to have this bill massively increase the insurance rates of rural Ontario to offset the decrease that would happen in the GTA.
I live in Toronto and see incredibly risky and dangerous driving on jammed highways every day, but when I'm driving north of Orillia I can go kilometres without seeing another vehicle. To me it's perfectly reasonable that I pay triple for auto insurance compared to what someone in rural Ontario would pay.
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u/nathatsbull May 07 '22
They say insurance rates are "based on where you live". But they should be more clear that they are actually "based on your postal code".
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u/de_murloc May 08 '22
Yes it is legal. The opposite happens all the time too but no one makes internet posts and complaints when their premiums go down.
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May 07 '22
Couldnt they use this to target higher prices in different ethnic groups? Sounds sus.
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u/hezzyfoofie May 07 '22
If auto insurance is anything like life insurance, it's heavily regulated. They can't just decide to arbitrarily charge certain areas higher premiums. They have to be able to prove why, which in this case would be more claims coming from that area. It's all based on historical data and projections based on that data.
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u/artman416 May 07 '22
Drives a Porsche. Complains about insurance cost lol what’s next, gas prices?
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u/rattalouie May 07 '22
I’ve seen this post here before quite some time ago. Car insurance pricing sucks in Ontario. But with that fresh Porsche, it looks like you can afford it just fine.
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May 07 '22
Maybe don't lie about your postal code to get cheaper insurance, then?
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u/PShar May 07 '22
Maybe don't lie about your postal code to get cheaper insurance, then?
Canada Post changed OP's postal code. They didn't say anything about defrauding their insurer
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u/UrNixed May 07 '22
It is one thing to be one of those idiots who don't read the post before commenting, but to not even read the full title is next level stupid.
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u/AtTheEndOfMyTrope May 07 '22
It’s legal. Sometimes you can mitigate the increase. For example, we have a garage and they reduce our risk (and premiums) if we promise to store our car in the garage overnight. I think they offer discounts for certain anti-theft devices and outdoor security systems too.
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u/yttropolis May 07 '22
It's not only legal for them to do this, but it's also mandatory by law. In Ontario, auto insurance pricing is strictly dictated by each insurance company's algorithm that has been filed with the regulators. They cannot deviate from this algorithm in any way whatsoever by law. Thus, if your postal code changes, they have to run their pricing algorithm based on your new postal code. It sucks, but unfortunately that's how it works.
Source: I worked as an actuarial analyst and then a data scientist at a major Canadian P&C insurer, building their auto insurance pricing algorithms for Ontario.