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.
