8 ways location impacts insurance premiums

Location, location, location! 

Not only does location matter when you are house hunting, it also plays a part in the premium you will pay for your home and auto insurance policy.   We have broken down some of the specific ways in which your location affects your premiums. For simplicity's sake, we'll divide them based on category.

Auto

1. Provincial differences

Auto insurance is regulated provincially and thus subject to all sorts of provincial inequities. Some of this is legislation-based and some of it is a response to the habits and behaviours of drivers.

For example, drivers in Québec pay significantly less on average for auto insurance because their personal damage coverage is facilitated through a low-cost public program and supplemented by private property coverage which has a relatively low minimum payment threshold. Other provinces (British Columbia, Manitoba, Saskatchewan) have public insurance programs too, but it doesn't mean they'll pay less for their premiums overall. In the case of BC, it's actually quite the opposite.

If the province has a high volume of claims, it will unfortunately cause everyone's premiums to rise slightly as a result. Fraud plays a role as well, which is something that has plagued Ontario's system quite badly.

2. Density of traffic

Accidents are far more likely to occur when a driver is in a high-density area than if he or she is in a sparsely populated ocation. That's just the law of averages: more people means a greater propensity for accidents.

This includes all types of traffic, not just motorists. High densities of pedestrians and bikers can produce the same effect. Since this tends to occur mostly in cities, it accounts—at least partially—for why Toronto-area drivers have such high auto insurance rates.

3. Vandalism and theft

It is unfortunate that theft and vandalism factor into auto insurance premiums, but not surprising. If a driver is living or working in an area that sees high crime rates, then it is only natural that an insurer would exercise caution and minimize risk by charging more for coverage.

The logic for this extends to parking. Drivers who can demonstrate that they park their vehicles in safer locations should have an easier time receiving or negotiating a lower rate.

Home

4. Weather-related predispositions

Certain locations are more prone to natural disasters than others. This is an undeniable fact. The sorts of tragic storms that have recently plagued Houston and Florida are more predisposed to occur in these locations. 

Still, Canada has its own weather-related predispositions to worry about. Forest fires have run rampant in BC this summer. Flooding has wreaked havoc on parts of Québec and Ontario's Windsor area. These are factors insurers will take note of when assessing an area's premium figures.

5. Frequency of past claims

Just as weather patterns alert companies that an area is risky to insure, the frequency of past claims in a city, neighbourhood, or street that aren'tweather-related can serve as an indicator that future claims have a higher likelihood of arising.

A policy holder needs to keep an eye out for high break-ins and vandalism in certain areas, which fall under the realm of human control. Some of this can be controlled by having a good home security system, but the statistical reputation of a neighbourhood will play a role in how comfortable an insurer may or may not be with a policy.

6. Proximity to aid

Being close to essential services such as a fire department or police station is a definite asset in paying a lower insurance premium. The amount of damage can be minimized if a fire station is 30 seconds away from a burning home versus 20 minutes. Everything comes back to risk for an insurer, and having a robust emergency response time definitely minimizes risk.

Travel

7. Where one travels

In some ways, this matters less than one might suspect. Most companies don't actually factor in the specifics of travel locations when providing a travel insurance quote. They'll often look for broad distinctions, such as whether the traveler is staying within his or her home country or travelling internationally.   Thus, someone travelling to Belgium from Canada could be assessed no differently than someone travelling to Japan.

Cost, however, is always factored in to these assessments; and the costs of travelling to certain countries over others differs greatly. Therefore, location will play a role in the price of an insurance premium, as flights and accommodations vary between destinations.

8. Travel advisories

Travel advisories are statements from the government of Canada that identify different degrees of normalcy with regard to visiting the countries of the world. Every nation is labeled with statements ranging from "Exercise normal security precautions" to "Avoid all travel."

When a country's danger level reaches a certain point, most insurers will stop issuing coverage for travelers to go visit it. Or, depending on where things are at, it could make premiums more costly, since the risk will be greater.