What to do if your insurance provider suddenly increases your rate?

Life is very expensive these days. Ongoing inflation has meant that prices for everyday goods like groceries and gas are way up. And the last thing you need is another unexpected expense. 

But sometimes, one comes in the form of your car insurance rates. Occasionally it might be because of actions you had control over – but just as likely, it’s because of something completely out of your hands. So, what causes your rates to go up? And, more importantly, what can you do about it? 

What causes auto insurance rates to go up in Canada in 2023? 

There are vexingly many reasons why you might see your car insurance rate go up. Often it’s due to your own driving behaviour, or choices you make about the kind of vehicle you drive. 

Reasons within your control 

More often than not, premium hikes come from more claims — either the claims that you file personally, or claims that are statistically relevant to the car you drive. Here's just a few reasons why your premium might have increased due to something within your control, whether you knew it or not at the time. 

If you were deemed at-fault in an accident 

If you were in an accident and found at fault, then it's almost a certainty that your premiums will rise.To be found at-fault, investigators need to find that you are responsible for 50 per cent or more of the collision. Even a person with a clean driving record can have their premiums rise by 30 per cent or more following an at-fault accident.  

Owning a vehicle at high risk of theft  

While technically any car can be stolen, certain models are far more desirable. Every six minutes in Canada, a car is stolen by organised crime, with thefts particularly up in Quebec, Newfoundland, PEI and Ontario. Thieves are looking for specific vehicle models that are in demand overseas.  

To compensate for that risk, car insurance providers may raise your premium. Depending on the model you drive, that could be up to a 20% increase in insurance rates upon renewal. Some insurers have also started implementing a high-theft surcharge for drivers. 

Related: How expensive is it to insure one of Canada's top 10 most stolen vehicles? 

Buying a new vehicle that’s worth more, or more complicated to repair 

As vehicles are built with more advanced technology like e-vehicle batteries, rearview cameras and driver assistance technologies, they become harder and more expensive to repair. Vehicles that have harder-to-source parts, or parts that might have to be shipped from farther away, will also be more expensive to insure. Choosing a new car that has all these bells and whistles might slightly increase your premiums.  

Reasons out of your control 

While you decide whether or not you want to buy a new car, you have little control over the economy. Here’s a few things that will increase your rates — even if you are the best driver in Canada. 

High inflation 

While Canada’s high inflation rate might not seem immediately obviously connected to your car insurance rate, consider this: if you need to make a claim because of damage to your car, the repairs will be more expensive because right now, all consumer goods cost a lot. That risk gets passed back to you, the insurance customer.  

Harder-to-source parts and the microchip shortage 

As noted above, cars contain many more complex components these days. Those parts are often made abroad. While the supply chain is working much better than it did during the throes of the pandemic, it is still catching up—another factor raising the price of parts. 

A key component in most cars is a microchip. Since 2020, there has been a shortage of them caused by pandemic staffing and supply chain issues. Though the situation is improving, it has meant less cars have gone into production, and those that are on the road have increased repair costs. All of this has to be factored in when calculating insurance rates. 

Significant losses across the industry 

In 2022, the Canadian insurance industry paid out over $3 billion in insured losses due to catastrophic events. Because of this increase, insurers have to prepare for the fact that in the future, that number may be met, or exceeded, again.  

Five ways to reduce your insurance premium 

From appealing past mistakes to buffing up the safety features of your car, there are a number of avenues to explore to get your car insurance back down to an affordable level.  

1. Ask your insurance provider to reassess your driving history 

Mistakes happen — but they’re not supposed to follow you forever. Some tickets should stay on your record for no longer than three years; and at-fault accidents can be wiped clean after six. However, if a broker has let small tickets or infractions made a long-time ago influence your rate, you may have grounds for an appeal. Similarly, perhaps the blame for a collision was unfairly shifted to you. You can appeal that decision, and ask for it to be looked at again. 

2. Appeal to the insurance company’s ombudsman office or file a complaint to FSRA 

If going directly to your insurance company doesn’t work, you can try going to the ombudsman, which is an office tasked with dealing with complaints about the brokerage's decisions and practices. They will review your claim and determine whether you should in fact have a lower rate.  

Ontarians also have the option of filing a complaint with the Financial Services Regulatory Authority of Ontario (FSRA). 

3. Installing anti-theft devices 

Many insurers offer a discount if you install anti-theft devices, including GPS trackers, vehicle recovery systems and hidden kill-switches to cut electricity to the vehicle. Make sure to ask your insurance company what discounts they do offer—and when it’s time to renew your coverage, do some shopping around to see if you can get a more competitive rate. 

4. Look for discounts and endorsements that will customize your coverage 

Are you retired? Do you drive an electric vehicle? Are you a CAA member? Your personal situation may actually help you get discounts on car insurance. Ask your broker what kind of opportunities are available for you. 

5. Consider Usage-Based Insurance  

Do you consider yourself a cautious and safe driver? If so, usage-based insurance might be for you. When you sign up for this, insurance companies collect data about your driving habits via a device installed in your car. Your rate is based on the actual use of your vehicle. It’s a good option for those who don’t drive very much.