You’ve been driving your vehicle less for the last year, and you are expecting that your insurance rates will go down. That’s possible, but many other factors affect the cost of your coverage. Let’s review them to better understand why you may have been paying more over the years.

Reasons related to your situation

Your insurance premium rate is recalculated at every renewal. A range of factors are taken into account:

• The age of your vehicle
• The model: Luxury or sports utility vehicles are more at risk of theft. If you drive this type of vehicle, your insurance may cost more. Let’s take a look at the models that thieves prefer. Is your car among the top 10?

The models most stolen in Canada in 2020

Statistics for the top 10 stolen vehicles in Canada in 2020, provided by the Insurance Bureau of Canada

• A change to your file: The addition of a driver impacts the cost of your coverage. For example, it costs more to insure teens, especially if they haven’t had much experience behind the wheel.
• Changed usage of the vehicle: Are you driving your vehicle less? Your insurer will take this into account. However, even if your mileage has decreased, your premium may increase if you use the vehicle for work purposes, such as visiting clients or suppliers.
• The location of your residence: The crime rate or an increased number of accidents in your area could affect the cost of your coverage.
• Your driving record: Your insurance rates are negatively impacted if your driver's licence is suspended or if you commit traffic violations, submit claims or have accidents.

Did you know? After an accident or theft, the risk of a repeat occurring is higher in subsequent years.

Reasons not under your control

Car insurance premium increases are not only based on your situation. External factors also play an important role.

Higher costs to settle claims

In Canada, costs for settling claims are climbing. Repairing a car costs more than before:

- The labour shortage – in particular for skilled trades such as body shop – is one of the causes. This shortage leads to higher salaries, which has consequences on the amount charged by garages to repair cars.

- The increasing cost of car parts also leads to spiralling prices. Vehicles are equipped with more advanced technology, such as systems for monitoring blind spots and tracking lane changes. These devices are sensitive to impact and usually require expensive replacement parts and complicated repairs. On top of that, there are the costs of ongoing training for mechanics and the purchase of state-of-the-art equipment. All these factors cause rates to climb.

Climate change muddies the waters

The number of car insurance claims and their cost are also due to extreme weather events. For example, the number of vehicles damaged by floods is rising, since this type of event occurs more frequently in Canada than previously.

Extreme winter conditions are more frequent and result in more accidents. During periods of intense cold, sanding doesn’t work as well, leading to more collisions. Hail and ice storms or violent winds can cause branches, trees and hydro poles to fall on your vehicle, damaging the body.

As you can see: Your car insurance rates are based on multiple factors that are constantly evolving.