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ask joanne

Recently, I became a full-time student after working and commuting from Barrie, Ont., to Base Borden (Angus, Ont.) for 11 years. The distance each way was about 20 kilometres, therefore a 40-kilometre round trip per day. My total yearly mileage estimate (work and leisure) was 40,000 kilometres per year.

I called my insurance company to explain my new situation and that I would no longer be driving to work. The majority of my courses are online and the school I attend once a week is 1.5 kilometres from my home. My estimate of yearly mileage is now about half, around 20,000 kilometres.

I was shocked and confused to hear that my insurance rate would go up. I was immediately billed the increased amount. The cost is minimal, it's the principle that I am concerned with. Is this normal? This does not make any sense. I cannot imagine that when I am finished school in April and I call my insurance company to state that I will be commuting again and my mileage increasing, that my rate will go down. My renewal is in January.

– Celia in Barrie, Ont.

Insurance can be confusing at the best of times, and your situation is no exception: you're driving less, but paying more. Using the details you provided – and assuming you haven't switched vehicles, there are a few things that may help explain what's going on.

Now that you're a full-time student and no longer using your vehicle to commute to work, your annual mileage is cut in half, but the estimated 20,000 kilometres you travel each year may not be low enough to bump you into a reduced premium bracket.

"It really depends on how the insurance companies group those sorts of things. Dropping from 40,000 km to 20,000 km might not have really changed the classification," says Pete Karageorgos, Manager, Consumer and Industry Relations, Ontario at the Insurance Bureau of Canada. "A particular company may still have 20,000 km as a commuting class rather than a pleasure class – because a pleasure class for them might be less than 15,000 km per year. So, although you think you might qualify for a break, unfortunately you do not."

After advising your insurer of your recent change in vehicle use, it's possible that they ran a motor vehicle record (MVR) report and discovered a previously undetected traffic ticket or accident. The addition of a new driver, or a moving violation by another driver in your household with access to the vehicle could also drive up your premium.

It's worth having a close look at your renewal notice, and comparing it with past notices. Has anything apart from the kilometres driven changed over the past year?

Perhaps the only change you're seeing is a scheduled rate increase, which has offset any reduction in premium based on your decreased mileage. If your policy comes due January 1, and the insurance company received approval and filed for a 10 per cent rate increase last March, you won't typically see the increase on your policy until January. In this case however, because you recently called your insurer to make a change, it may have reissued the policy now with the scheduled increase in the renewal premium that would have normally gone through in January.

It's worth having an in-depth discussion with your provider to get a full understanding of what's going on.

"Unfortunately, when most people call or talk to their insurance representative, the conversations tend to be really short and for one reason or another they don't have the opportunity to sit down and receive a full understanding of it," says Karageorgos. "That's something we struggle with and try to encourage insurers and consumers to take the time and get a better understanding, because becoming a wiser and more savvy consumer is beneficial to everyone – the companies as well as the individual."

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