Why does my car insurance premium increase every year?


Several factors can increase your car insurance rate each year. Comparing auto insurance rates should be standard practice.

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If you own a vehicle, you know car insurance is a mandatory fixed expense for the term of your policy. But over the years, your car insurance premium can go up, even for reasons other than the individual risk you pose as a driver.

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While your rate is not guaranteed to increase each year you are insured, it can fluctuate for many reasons, from Canada’s economic situation to current claims data for your particular vehicle model, as well as your postal code. current. Provinces may also experience rate increases at different times, depending on the provincial auto insurance regulator’s approval process. Although many of these factors are beyond your control, it is possible to counter any increase you may experience upon renewal by compare car insurance rates annually.

Factors that can increase your auto insurance rate

When the cost of living puts pressure on the Canadian economy, you can expect your car insurance premium to reflect this. For example, in June we experienced the largest annual increase in inflation we have seen in nearly 40 yearsand it had an impact.

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Many of our daily expenses increase when inflation is high, including transport costs like gas. However, Statistics Canada’s Consumer Price Index (CPI) also regulates passenger vehicle insurance premiums and the cost of auto parts, maintenance and repairs. Unfortunately, with inflation hits 8.1%these costs are higher than usual.

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Due to ongoing supply chain delays caused by COVID-19, auto parts are also more difficult to acquire, leading to longer wait times for repairs. Drivers find themselves without their primary means of transportation and need replacement rental vehicles for longer periods of time, which can drive up claims costs and therefore premiums.

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The risk rating for your vehicle model may also change each year depending on its Automotive pricing based on Canadian claims experience (CLEAR), which measures its likelihood of a claim, how much a claim might cost, and whether it is likely to be stolen. This risk can change from year to year based on insurance claims data, as can your ZIP code’s group claims frequency, which can also increase your rate even if you don’t have your own. same complaint.

How rate increases are approved in the provinces

When insurance companies notice that the cost of claims is increasing, they can request a rate increase from their provincial insurance regulator. However, if granted, this increase can only be applied at the beginning of the following insurance year. Customers will therefore only see a rate increase once their policy renews, rather than in the middle of their term.

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For example, in Ontario, the Financial Services Regulatory Authority of Ontario (ARSF) must approve rate increases before a private insurance company can increase its rates.

Similarly, government-owned auto insurance companies, such as those in British Columbia, Manitoba and Saskatchewan must submit a proposal for a new tariff program to a provincial review board which must be approved by the government.

How to get the lowest auto insurance rate every year

One of the best ways to avoid paying more for your car insurance premium each year is to compare car insurance rates before your policy automatically renews. While it may seem convenient to automatically renew your policy with your current insurance provider, you could be missing out on the savings.

Comparing rates between different providers in Canada can ensure you get the lowest possible rate for the coverage you need. Similar to how rates can vary from province to province, they also vary from company to company, depending on how many claims they pay. So be sure to shop around in the market before renewing your policy.

LowestRates.ca is a free, independent rate comparison website that allows Canadians to compare rates for various financial products, such as home and auto insurance, mortgages and credit cards.


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