Why is My Insurance Premium Going Up?

Published on April 22, 2019 in Tips & Advice: Protect your car by The Car Guide Partner

This advertorial is brought to you by the Insurance Bureau of Canada (IBC)

You’re a good driver. You haven’t had any accidents. And yet, your insurance premium is going up. Why?

Claims have gone up, as has the cost of auto repairs, over the past several years. With more claim payouts and higher costs, the premiums required to pay losses must be adjusted. This is what’s happening at the moment on the auto insurance market.

When you’ve been in a road accident and make a claim, your insurer uses the premiums paid by all of its customers to compensate you.

Auto Repair Costs

The greater use of in-vehicle technology, which directly impacts repair costs, is a key factor in explaining the higher auto insurance premiums. In fact, according the stats compiled by Groupement des assureurs automobiles (GAA), repair costs have risen 25% over the past 10 years. In fact, the average cost of repairing a vehicle after a collision was $3,500 in 2008, compared to $4,400 in 2017.

The arrival of driver-assistance systems, now available on more and more models, are changing our vehicles into veritable rolling computers. Over the years, the technology has become more sophisticated and parts and labour costs have risen, driving up repair costs.

Losses Are Up

Another explanation for the higher insurance premiums is the steady rise in claims volume and frequency. GAA stats confirm this. For the past two years, claims frequency and costs were up significantly. However, the premiums charged by insurers did not follow the trend.

Is There Anything I Can Do About This?

Yes, there is. Not only can you choose your vehicle and your insurance coverage, you can also control the cost of your auto insurance.

Tip 1: Shop Around

The auto insurance market is very competitive. Take advantage of that and shop around. But make sure you compare the coverage you’re being offered.

Tip 2: Drive Carefully

Of all the claims paid by insurers, the vast majority are for road accidents. Collisions can be avoided by adopting safe driving habits and being courteous on the road.

Tip 3: Reduce Distractions

Avoid all distractions when you take the wheel. For example, plan your route and program your GPS before starting out.

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