By Leah Golob
Drivers may be in for some sticker shock when it comes time to renew their auto insurance.
As the cost of auto parts increases, wait times for those parts grow longer, and the price and demand for rental vehicles goes up, Anne Marie Thomas of the Insurance Bureau of Canada said insurers are looking to raise their premiums if they haven’t already.
“With increased claims costs very often comes increased insurance premiums,” she said. “But, having said that, the good news is that insurance premiums are not rising to the cost of inflation.”
Canada’s inflation rate hit a nearly 40-year high of 8.1 per cent in June, but auto insurance premiums actually decreased 0.7 per cent nationwide, Thomas said.
Yet any price increase is likely to sting after many customers saw rebates during 2020 and 2021, when there were fewer drivers on the road during pandemic restrictions, and higher rates are on their way.
The Financial Services Regulatory Authority of Ontario, for example, approved rate increases from several insurers that will begin to roll out in September. For example, Allstate Insurance Company received an approved rate change of 4.99 per cent while Zenith Insurance Company received a rate change of 10.37 per cent.
Another reason rates are jumping is because traffic is becoming denser as more people return to the office and other activities outside the home compared with the height of the pandemic, said Tanisha Kishan, an insurance expert with Ratesdotca.
“The presence of a lot more vehicles on the road, essentially that traffic density piece, could lead to a likelihood of increased claims, which would then correlate to rate increases as well,” Kishan said.
Every province is regulated differently but these underlying factors affecting drivers coast-to-coast mean we’ll see rate increases on a national scale, she said.
For consumers notified that their rates will increase upon renewal, Kishan advises them to use that 30 to 60 day notice period to shop around and see what other offers are available as not all insurers will provide drivers with the same policy.
For those confident in their driving abilities, and who perhaps spend limited time on the road, Kishan recommends looking into usage-based programs that provide discounts based on driving behaviour.
Now is the time to also review your policy with a broker or insurance agent to make sure your coverage is still applicable.
“Some consumers, depending on how old their car is, might opt to reduce coverage on it. Some individuals might choose to increase their deductible, which is the amount that they would pay in the (event) of a claim. All of these little things could reduce your overall premium,” she said.
A broker or agent might also be able to spot if you’re eligible for a group discount, Thomas said.
For example, you might be able to get an alumni group discount if you graduated from a particular college or university.
There might also be a discount if you put your home and auto insurance policy together or if your household has multiple vehicles and you place them on the same policy, she added.
This report by The Canadian Press was first published Sept. 20, 2022.
Banner image via The Canadian Press