Insurance rates for both cars and homes are increasing, and it’s important to understand that there are many things that contribute to these increases. Whether you’re purchasing a new policy or renewing an existing one, understanding these factors will give you insight into how your premiums are calculated and why they might be going up.
Reasons Your Home Insurance Premiums Increase
Even if you haven’t had a home insurance claim, there are many factors that could result in higher home insurance premiums.
- Extreme weather events and catastrophes are more frequent and severe in many parts of southern Ontario. As forest fires, floods, storms, and other weather events become more frequent and severe, they cause more extensive damage and result in more frequent and costly claims.
- Inflation is making everything more expensive. As inflation leads to higher prices for goods and services, it also affects home repair costs such as building materials and labour. That means paying for claims is more expensive, too.
- Supply chain disruptions and labour shortages are leading to higher costs. The harder it is to find labour and materials, the more expensive it is to complete home repairs after a damage-related claim.
- Rising home values and more homes with high-end entertainment features drive up replacement costs and liability claims.
- Eco-friendly features such as solar panels, energy efficient windows and doors, and high-efficiency appliances are great choices for our environment. But it’s important to realize that if these types of items are damaged, they could require more expensive repairs.
Reasons Your Auto Insurance Premiums Increase
Even if you’ve had no accidents, no tickets, and no claims, there are many factors that could result in higher auto insurance premiums.
- Newer vehicles feature many new drive assistance technologies like adaptive cruise control, advanced driver assistance programs in windshields, and park assist to keep you and your passengers safe. They all use complex computers and sensors that cost more to repair – even after a minor fender bender.
- Driving patterns have returned to pre-pandemic levels. More people are back on the road, meaning collisions and claims are increasing in frequency.
- Inflation is making everything more expensive. As inflation leads to higher prices for all goods and services, it also affects the cost of new and used vehicles, parts, and labour. That means paying for claims is more expensive, too.
- Supply chain disruptions and labour shortages are leading to higher costs. The harder it is to find labour and materials, the more expensive it is to complete vehicle repairs or replace an unrepairable vehicle after a damage-related claim.
- Car theft is on the rise. Car thieves are taking advantage of the increased value of used cars and stealing a wide variety of vehicles at an unprecedented rate. The Insurance Bureau of Canada states that insurers paid $1.2 billion in claims for stolen vehicles in 2023, which is the first time in history that it exceeded $1 billion. In Ontario alone, auto theft claims costs were up a staggering 329% from 2018.
- Distracted driving is also on the rise. Distracted driving now outpaces impaired driving as a leading cause of accidents and deaths on the road, resulting in an increase in related claims. Premiums are increasing to offset the costs of these claims.
Talk to your Ayr Farmers Mutual Insurance Agent or Broker today about your home and auto insurance coverage, or request a free, no obligation quote.
Disclaimer: The information provided on this blog is for educational purposes only and is not intended as professional insurance advice. The coverage, terms, and conditions of each insurance policy are unique and subject to individual circumstances. The information provided does not guarantee the availability or suitability of any insurance policy for your specific needs. You should not rely on the information in the blog as an alternative to professional advice from your Insurance Broker or Insurance Company. If you have any specific questions about any insurance matter, please consult a Licensed Insurance Agent or Insurance Broker for personalized advice and guidance.