When you get your auto insurance renewal, and your premiums have gone up – sometimes substantially – the first question you ask is why.

The cost of living has risen for everyone and that includes auto insurance. It’s important to understand the main factors contributing to these increases which will better equip you to take steps to reduce rates.

1. Auto theft

One of the biggest challenges for insurers is the auto theft. Recent data released by the Insurance Bureau of Canada (IBC) reveals in 2023 the cost of insurance claims to replace stolen vehicles in Canada skyrocketed to a record-breaking $1.5 billion.

2. Lingering inflation and supply chain issues

While overall inflation in Canada has been decreasing in 2024, it’s a different story when it comes to the costs that directly impact auto insurance claims.

According to Statistics Canada data, insurers were seeing auto insurance claims costs much higher than the peak inflation rate. Over the past three years the cost for new passenger vehicles increased by 12.1%, while the cost of vehicle parts and replacement increased by 18%.

3. More sophisticated technology

Insurance premiums can also be affected by new technology in vehicles making repairs more expensive and increasing claims costs. While new cars come with significant safety features like blind spot monitoring, this technology requires sophisticated sensors.

Personal reasons for increase

But there are also personal and societal reasons your premiums may have risen.

Your driver profile, including factors such as where you live, age, gender, credit report and driving record influence what you pay.

The make and model of the car you drive and the cost to repair it determine how much you will pay for insurance. If you drive a lot, the risk of an accident naturally increases. For that reason, insurers also tend to charge higher rates to those who spend more time on the road.

How to save on premiums

Working with your insurance broker, there are several things you can do to combat rising rates. These include:

· Shop around. If you live in a province, such as Ontario, your broker will be able to compare different insurance companies. If you’re notified upon renewal your rates will increase, use the 30- to 60-day notice period to your advantage.

· Increase the deductible. The amount you pay should you need to make a claim –can reduce rates.

· Stay claims free. Having a clean driving record is one of the best ways to keep premiums down.

· Pay annually. If you pay for the entire insurance premium at once, you save administrative fee.

Discounts

Your broker may be able to hunt down discounts. Some include:

· Bundling. Having your home and auto insurance policies with the same insurer

· Winter tires. Changing your tires when the cold weather sets in

· Multi-vehicle discount – Insuring multiple vehicles under the same policy can help.

· Use anti-theft devices –Installing after-market security devices such as anti-theft recovery systems

NACC has partnered with HUB Insurance to provide a one-stop-shop for Commercial Insurance, Employee and Student Benefits, Group Retirement, Surety and Personal Insurance. To discuss your college’s unique needs please complete the form found here: HUB Inquiry Form: HUB Inquiry Form