Does your postal code determine the cost of renters insurance?
There are so many factors that can affect the cost of your insurance, whether it’s auto, travel, or some sort of property. If you are looking to get renters insurance, one factor that plays a part in determining the cost of your premiums is your postal code. Yes, where you live can impact the cost of your insurance.
Why get renters insurance?
Before we get into how your postcode can affect the cost of your rental insurance, let’s take a look at what it is your renters insurance does for you. If you rent your dwelling instead of own it, you may think that you do not need renters insurance, but that couldn’t be further from the truth. Any coverage that your landlord may have will only cover the common areas of your building, and not your actual unit. To ensure that your unit and your possessions are covered, you need to get your own insurance. Luckily renters insurance is relatively inexpensive compared to other forms of property insurance, so it is good investment for the peace of mind it brings.
The quote test
To see the tangible results, we used the HUB Insurance Hunter renters insurance quote tool to see just how different prices can be from neighbourhood to neighbourhood.
For this test, we focused on different areas within Toronto. All information regarding the tenant and building specs remained the same, apart from the postal code to accurately compare prices. The test subject is a 28-year-old non-smoker female who is the sole applicant with no prior claims, and a $1,000 deducible/$1,000,000 liability.
Test 1 – Old Toronto
Postal code – M4V 2A7
Price – $386 a year ($33/monthly)
Test 2 – Downtown Toronto
Postal code – M5J 0A9
Price – $384 a year ($32/monthly)
Test 3 – Etobicoke
Postal code – M8Z 4M1
Price – $413 a year ($35/monthly)
Test 4 – Scarborough
Postal code – M1G 1W8
Price – $401 a year ($34/monthly)
As we can see from the different tests, the price of renters insurance varies from Toronto neighbourhood to neighbourhood. It may not seem like a big difference month to month, but annually it can add up.
Why does your postal code matter?
So why is it that your postal code matters to your insurer? Well, as an insurer they want to assume the least amount of risk associated with your policy as possible. If you are considered lower risk, chances are lower that you will actually need to put forth a claim, saving your insurer money. As a reward, you pay less on your premiums.
Depending on your postal code, different risk factors could affect your policy. Your postal code indicated where you live, and different locations means different risks could be associated with it. Different criteria may be used to determine location based risks from insurer to insurer, so it is best to speak with an insurance broker and ask how much your postal code could affect your policy.