Drivers can experience sticker shock when it’s time to renew their auto insurance.
As the cost of auto parts increases, wait times for those parts increase, and the price and demand for rental vehicles increases, Anne Marie Thomas of the Insurance Bureau of Canada said insurers are trying to increase their premiums when they aren’t already to have .
“Increased damage costs are very often accompanied by higher insurance premiums,” she said. “But the good news is insurance premiums aren’t rising at the cost of inflation.”
Canada’s inflation rate hit a near 40-year high at 8.1 percent in June, but nationwide auto insurance premiums actually fell 0.7 percent, Thomas said.
But any price increase will likely sting after many customers got rebates in 2020 and 2021, when fewer drivers were on the road and higher fares are on the way during pandemic restrictions.
For example, the Financial Services Regulatory Authority of Ontario approved rate increases for several insurers that will be implemented in September. For example, Allstate Insurance Company received an approved rate change of 4.99%, while Zenith Insurance Company received a 10.37% rate change.
Another reason interest rates are rising is that traffic is getting heavier as more people return to the office and other activities outside the home compared to the peak of the pandemic, said Tanisha Kishan, an insurance expert at Ratesdotca.
“The presence of many more vehicles on the road, essentially this piece of traffic density, could lead to a likelihood of increased claims, which would then also correlate with tariff increases,” Kishan said.
Each province is regulated differently, but these underlying factors affecting drivers coast-to-coast mean we will see rate increases nationally, she said.
For consumers who are notified that their rates will increase upon renewal, Kishan advises using this 30- to 60-day notice period to shop around and see what other deals are available, as not all insurers offer the same policy to drivers .
For those who are confident in their driving skills and may have limited time on the road, Kishan recommends looking into usage-based programs that offer discounts based on driving behavior.
Now is the time to also check your policy with a broker or insurance agent to make sure your coverage is still valid.
“Some consumers may choose to reduce coverage based on how old their car is. Some people may choose to increase their deductible, which is the amount they would pay in the event of a claim. All those little things could reduce your overall premium,” she said.
A broker or agent may also be able to tell if you’re eligible for a group discount, Thomas said.
For example, you may be able to receive an alumni group discount if you graduated from a particular college or university.
There could also be a discount if you combine your home and car insurance policies or if your household has multiple vehicles and you put them on the same policy, she added.
This report from The Canadian Press was first published on September 20, 2022.
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