Auto insurance premiums are set to climb this year as inflation, supply chain issues and theft make it more expensive to insure a vehicle, according to a new report.
The analysis from RATESDOTCA, released on Monday, found insurance premiums climbed six per cent between December 2022 and December 2023. With sticky inflation and anticipated insurance rate increases, Canadians can expect to pay more again this year, the report found.
“Many of the same factors that forced insurers to raise rates in 2023 are still factors as we move into 2024,” says Daniel Ivans, RATESDOTCA insurance expert and licensed insurance broker, wrote in a news release on the finders.
“Inflation is still running high, auto theft is rampant in certain provinces and we are still seeing parts shortages and repair delays. All of these play a role in rising insurance premiums.”
Auto theft 'crisis'
RATESDOTCA describes auto theft as a “national crisis” that has caused insurance premiums to risk upwards of 50 per cent for at-risk vehicles. Owners could face a $500 surcharge unless they install an anti-theft system.
Auto repairs are also making rate more expensive, as supply chain issues drive up the prices for parts and advanced car technology makes vehicle repair more specialized, the report found.
Insurance rates are also a factor. The Financial Services Regulatory Authority of Canada recently approved several rate increases for auto insurers, which take effect at some point in the first half of this year, depending on the provider.
Relief incoming?
While the report predicts insurance premium increases for the year, it also noted some cause for optimism.
For one, economists largely expect inflation to come down this year, and with it, insurance premiums should dip as well.
“Insurance premiums are affected by the increase in price of goods, services, and labour,” the report stated. “If inflation eases this year, it will help insurers recoup some of their physical damage losses.”
Additionally, provincial legislation in Alberta and Ontario could make auto insurance more affordable for drivers in those provinces.
Alberta, the province with highest claim frequencies, has introduced an insurance rate cap of 3.7 per cent for good drivers – though critics of the plan worry it may drive some companies out of the province and could have Albertans paying out-of-pocket for claims to avoid losing that “good driver” status, the report said.
In Ontario, meanwhile, changes that took effect this month allow Ontarians to opt out of Direct Compensation - Property Damage (DCPD), which will drive down premiums, though taking this option puts drivers at risk of losing reimbursem*nt in the event of a not-at-fault collision.
FAQs
Auto insurance premiums are set to climb this year as inflation, supply chain issues and theft make it more expensive to insure a vehicle, according to a new report. The analysis from RATESDOTCA, released on Monday, found insurance premiums climbed six per cent between December 2022 and December 2023.
Why are auto insurance rates increasing in Ontario? ›
The auditor reported in 2022 that Ontarians were paying the highest average car insurance premiums in the country. Since then, rates across Canada have increased further due to a combination of inflation, rising auto theft, and pandemic-driven supply chain issues. Forecasts predict further premium hikes in 2024.
Is inflation causing auto insurance to go up? ›
The index is a key inflation gauge and a broad measure of the cost of goods and services across the economy. Auto insurance costs have been on the rise for some time, growing every month as part of the index since December 2021. Since then, costs have increased by 45.8%, according to U.S. Bureau of Labor Statistics.
Why did everyones car insurance go up? ›
More severe and frequent car accidents
Vehicles head east on a Los Angeles freeway during the evening rush hour commute on April 12, 2023 in Los Angeles, California. That has led to an increase in claims that is well above historical averages because of their severity, according to LexisNexis Risk Solutions data.
Why would insurance be so high? ›
Your particular driver profile, which includes factors like where you live, your age and your driving record, influences what you pay for car insurance. But rising car repair costs and an increase in disaster-related claims are significant reasons why car insurance rates are surging for many drivers.
Why is Canada's auto insurance so high? ›
Auto insurance premiums are set to climb this year as inflation, supply chain issues and theft make it more expensive to insure a vehicle, according to a new report. The analysis from RATESDOTCA, released on Monday, found insurance premiums climbed six per cent between December 2022 and December 2023.
Is car insurance expensive in Canada? ›
Recent industry data shows that Canadian drivers pay an average of $1,300 to $1,800 in car insurance premiums annually. The amount you pay, however, can be significantly higher or lower, depending on where you live.
Why did my auto insurance go up in 2024? ›
"Between 2020 and 2024, inflation increased the cost of vehicle parts and labor, car crash fatalities increased by over 10% and we saw a significant rise in extreme weather and vehicle theft claims. All these factors contribute to the high rates we're seeing today."
Will auto insurance premium increase in 2024? ›
In fact, according to a report from Bankrate, the average annual premium of full coverage auto insurance rose to $2,543 in 2024 — up 26% from the previous year.
Will car insurance go down after inflation? ›
Insurance and inflation
If those costs increase, the price of insurance premiums will likely increase as well. Unfortunately, due to inflation these costs are increasing. Building materials for homes are more expensive, there's a chip shortage driving up the cost of cars, and there's also a labor shortage.
If your car insurance goes up for seemingly no reason when you renew your policy, it's likely due to an increase in risk that's outside of your control. This could include reasons like increased claims in your area (due to more extreme weather damage, more accidents, etc.) and higher car repair and replacement costs.
Why is Allstate so expensive? ›
Allstate is so expensive because car insurance is expensive in general, due to rising costs for insurers. Allstate's premiums may also reflect how competitively Allstate agents are paid, but at $781 per year, the average Allstate car insurance policy is actually cheaper than coverage from most competitors.
Why does my car insurance go up every 6 months? ›
While it can seem arbitrary, there are actual reasons you can see your price go up and down. Car insurance rates can change based on factors like claims, driving history, adding new drivers to your policy, and even your credit score.
Why is Geico so expensive? ›
Geico is so expensive because car insurance is expensive in general, due to rising costs for insurers. But at $462 per year, the average Geico car insurance policy is actually cheaper than coverage from most competitors. In fact, Geico is one of the cheapest car insurance companies nationally.
Is insurance cheaper if your car is paid off? ›
Is car insurance cheaper if you own your car? Car insurance premiums don't automatically go down when you pay off your car, but you can probably lower your premium by dropping coverage that's no longer required. Banks and financing companies who loan you money for your car are called lienholders.
Why is insurance so unaffordable? ›
Healthcare system complexity
This complexity often results in administrative inefficiencies, increased paperwork, and higher operational costs for both healthcare providers and insurers. These added expenses are eventually passed on to consumers in the form of higher insurance premiums, deductibles, and copayments.
Why did my car insurance go up in 2024 in Ontario? ›
Car insurance costs to rise in 2024 thanks to inflation, rampant auto thefts: report. Car insurance premiums are expected to keep climbing in 2024, with inflation and rampant auto theft driving the charge, according to a new report.
Why is car insurance so expensive all of a sudden? ›
Car accidents and traffic violations are common explanations for an insurance rate increase, but other reasons why your car insurance rate can go up include changing your address, adding a new vehicle or driver, increases to claims in your ZIP code, and increases to car repair/replacement cost.
Has car insurance gone up in Ontario? ›
Car insurance rates have jumped an average of 12% in the last 18 months, and in one city have risen almost 40%, according to a recent report by Toronto-based RATESDOTCA. In dollars, that means the average estimated car insurance premium is now $1,744.
Why did my car insurance go up in 2024? ›
With increasing costs across various parts of the automotive industry, from higher average repair costs to continuing supply chain issues, auto insurance companies have needed to raise rates to turn a profit.
