Rising Canadian Car and Home Insurance Rates: Expert Guide

Nowadays, it feels like everything is expensive. Products and goods that were once affordable, are starting to increase in price. To make things worse, traditionally expensive products are beginning to feel like luxury items.

Unfortunately, home and car insurance rates aren't immune from these price fluctuations. Many drivers and homeowners are starting to see their insurance rates rise.

This leads to the question, "why are auto and homeowners' insurance rates rising in Canada?".

We answer this question, and many more, in the following paragraphs.

Continue reading to get started.

Are auto and homeowners' insurance rates rising in Canada? — An in-depth analysis for policyholders

Yes, according to Statistics Canada's October Price Report Index, home and auto insurance rates are on the rise across the country.

Home insurance rates saw a year-over-year inflation of roughly 7.6%, and auto insurance rates saw a year-over-year increase of 3.9%. This means that drivers and homeowners who pay the average amount for insurance ($960 per year for home insurance and $1,800 per year for auto insurance) can expect to see a slight increase in their rates (to $1,032.96 and $1,870.20, respectively).

But why are auto and homeowners’ insurance rates rising across the country?

In short, it comes down to a wide variety of factors, like inflation, the rising price of vehicles, the increasing price of home rebuilds and climate change.

What factors affect the average auto insurance prices in Canada?

Several factors currently affect the price of auto insurance rates across the country, including inflation and rising vehicle prices.

Inflation

Studies show that auto parts, repairs, maintenance, etc., are becoming more and more expensive. Statistics Canada's October Price Report Index states that the price of these goods and services has gone up roughly 7.4%. 

The increased price of these goods and services dramatically impacts auto insurance rates. When a policyholder makes a claim, their auto insurance company needs to pay out roughly 7.4% more than they would have in the past. To counterbalance their growing expenses, auto insurance companies need to charge more for coverage, which, in turn, increases the average price of auto insurance in Canada.

Rising vehicle prices

However, inflation isn't the only thing that is affecting auto insurance rates; the price surge is also influenced by the growing vehicle costs in Canada.

Most modern vehicles come equipped with a wide range of high-end technology, like lane assistance and rear view cameras (all of which cost a pretty penny to manufacture, install and repair). Although these gadgets can positively influence your driving experience, they also affect auto insurance rates.

High-end technology is a huge selling point, and buyers are willing to pay more for a vehicle with top-of-the-line technology. Because of this, more and more automotive manufacturers are starting to increase the price of their models. As a rule of thumb, the more expensive a vehicle is, the more expensive it is to insure. So, if the average price of cars is going up, you can expect the national auto insurance rates to follow suit.

What factors affect the cost for home insurance in Canada?

As we mentioned earlier, homeowners' insurance rates are on the rise across the country. But what exactly is causing this to happen?

Some of the most noteworthy factors are the rising cost of home rebuilds/repairs and climate change.

The rising cost of home rebuilds in Canada

The rising cost of home rebuilds and repairs is having a huge impact on the price of home insurance in Canada.

Statistics Canada's October Price Report Index states that the cost of major repairs and rebuilds has gone up approximately 9.8% in Canada. The surge in repair and rebuild costs is due to a number of uncontrollable factors, ranging from the rising cost of materials to the lack of workers in the construction industry. To make matters worse, there's been an increased demand for housing across Canada, so competition and prices are expected to rise.

Your property's repair and rebuild costs play a huge role in determining your home insurance rate. So, if your property's repair and rebuild costs have increased, your home insurance rates will likely go up as well.

Climate change

Even though most Canadians know how to handle the cold, many people aren't prepared for unexpected natural disasters like tornadoes, hail storms and floods. Although these types of natural disasters are relatively rare in Canada, they're beginning to become more common due to climate change.

What does this have to do with the average national home insurance prices?

Simply put, the increased frequency of natural disasters is forcing policyholders to file more claims. For instance, homeowners submitted roughly $2.1 billion in property insurance claims in 2021 alone. 

To make up for the influx of claims, home insurance companies need to increase the price of their policyholders' rates.

Thankfully, even though auto and homeowners' insurance rates are rising in Canada, that doesn't mean you have to pay top dollar for coverage. The easiest way to save money on home insurance, auto insurance, or practically any other type of insurance is by teaming up with an online insurance brokerage, like Surex.

Online insurance brokerages are third-party companies that work with insurance providers and policyholders. When you contact an online insurance brokerage, you get access to competitively-priced quotes from some of the biggest names in the Canadian insurance industry.

Want to get started? Contact your personal Surex insurance advisor today!