David and Christine Pindar are standing in front of the Oshawa home they had custom-built, the three cars they own — two of them older models — parked nearby.
The Pindars were told by their insurance company that the premiums on those cars — and even their home — were going up because of a postal code change that meant they are now in an area with a higher risk of claims.
But in this case, the Pindars never moved.
Instead, David Pindar says that Canada Post changed the last three digits of their postal code, and when he called his longtime insurer about an unrelated matter and mentioned the change, he was informed that his premiums would increase.
“I didn’t move. We lived here for 10 years,” Pindar says he told a manager with Allstate. “This is ridiculous.”
Pindar says he was told by the manager that it was out of his hands and there was nothing he could do.
The manager did waive the increase last fall, but now, with their car and home insurance up for renewal, the Pindars will have to pay 10 per cent more for their car insurance and 37 per cent more for house insurance.
“For David and I, if you looked at our home and you looked at what we have, we’re not a hard-pressed story,” says Christine, who retired from CIBC in 2015. “But truly, this dips into our savings and has an effect on what we can do in our future with those savings.” Her husband retired from construction last year.
The manager directed all inquiries about the Pindars to Allstate media.
“We’re retired,” says David Pindar. “We’ve been driving forever and we’ve had different houses insured for ever and ever. And we don’t put claims in at all.”
When asked if the postal code change would impact both the Pindars’ home and auto insurance, Allstate spokesperson Jordan Kerbel said in an email that “all insurance companies operating in Ontario are mandated by the provincial regulator to consider postal codes when calculating premiums and we must adhere to that regulatory framework.”
Both policies are calculated using a “multitude of factors related to market conditions and individual circumstances, Kerbel said. “Home policies can be impacted by factors such as the type of home, its age, location and weather-related events. Auto policies may be impacted by factors such as the make of the vehicle, safety rating, experience of the driver, usage and claim frequencies.
“All of these components may be taken into consideration when calculating a policy.”
Allstate did not answer specific questions about the Pindars’ situation.
For the Pindars, the change means their auto insurance will increase to $3,508 from $3,188 annually to cover the 2014 Chevrolet Impala that Christine drives and David’s 2003 GMC pickup. The couple has a 2012 Miata convertible they keep garaged in the winter. Their home insurance policy will increase to $937 from $684 a year if they stay with Allstate.
Auto insurance premiums typically increase if a driver moves into an area their insurer deems a higher risk, even when there are no changes to their driving record.
This so-called “postal code discrimination” is the subject of a provincial bill that passed its second reading last month. It will have no bearing on home insurance.
Introduced as a private member’s bill by Conservative MPP Parm Gill, Bill 42 would ban the use of postal code, or area code, as a primary factor in determining auto insurance rates, which are based not only on geography but on a number of other factors such as your driving record, if you use your car for work, and the insurer’s claims experience with your make of car.
But geography seems to trump them all.
The bill would also rescind a requirement by the Financial Services Commission of Ontario, which regulates auto insurance, that mandates the number of territories that insurers must have.
Currently, insurers can divide the province into as many as 55 territories. Often insurers will aggregate postal codes to create those territories but they may use municipal boundaries as well.
If the regulation is rescinded as part of the bill, it means that those territories — in other words, your postal code — will not play as big a part in determining what you pay.
“A key component to this bulletin mandates that insurance companies divide the province up to a maximum of 55 territories, up to 10 of which can be in the city of Toronto alone,” Gill told the house. “We can already see how this is an issue, as it forces clusters of large areas to be grouped together simply based on geography; thus the term ‘postal code discrimination.’”
He says the bill would force insurance companies to use a driver’s record as a primary factor when calculating insurance premiums.
The MPP said that many of his constituents in Milton have complained their insurance went up when they moved, despite not having any recent claims or changes to their driving record. One resident told him that his car insurance went up $500 a year when he mentioned to his insurer that the last digit of his postal code was wrong.
Gurratan Singh, the New Democrat MPP for Brampton East, has criticized the bill for not eliminating the use of postal codes altogether.
“It does not prohibit insurers from using factors related to postal code when determining auto insurance premiums,” Singh told the house during the second reading. “Rather, it will prohibit insurers from using factors primarily related to postal code when determining auto insurance premiums, a loophole so big you can drive a giant, uninsured truck through it.”
Singh did say he would vote for the bill “because it speaks to an issue that my community has been fighting for years.”
The bill passed second reading unanimously and will be studied by a legislative committee before a third and final reading, which could be in weeks or even months.
Unlike automobile insurance, property insurance is not mandatory in Ontario and there are no requirements for insurance companies to receive approval of their underwriting criteria as there are for auto insurance, says a spokesperson for the Financial Services Commission. Insurers can provide coverage based on a consumer’s general risk factors, as well as location or postal code.
The situation the Pindars find themselves doesn’t happen very often.
Canada Post says that postal code changes are rare and that it goes to great lengths not to make changes, but will do so when it’s necessary to adjust a delivery route or because of population growth in a community.
In this case, the last three digits of the postal code L1H 0N5 are new and have been assigned to hundreds of addresses on Raglan Rd. W. in the north end of Oshawa.
The change could affect premiums for hundreds of people, although it depends on the insurer — each defines its own territories.
“In this instance, approximately 500 addresses in the Oshawa area are receiving a postal code change to support route modifications, which are necessary to accommodate increased growth in the area and to improve overall delivery efficiencies,” says Canada Post spokesperson Phil Legault in an email.
Residents may be unaware of the repercussions. It is up to the policy holder to inform their insurer of the change of address, says Vanessa Barrasa, a spokesperson for the Insurance Bureau of Canada.
The insurance bureau, which is a national association representing home, car and business insurers, supports Bill 42.
“This system has been in existence for decades and it’s outdated,” says Pete Karageorgos, the insurance bureau’s director of consumer and industry relations for Ontario. “It forces people to pay for high-risk drivers in their neighbourhoods when they’re not in fact high-risk drivers … because they’re all grouped together.”
Patty Winsa is a Toronto-based data reporter. Reach her via email: email@example.com