Understanding premium increases: What’s driving the change?

Have you noticed an increase in your insurance premium this year? Here are a few reasons that may explain the situation, along with tips to help reduce your bill.

Why did your premium increase?

Auto insurance policy – inflation and new vehicle costs
The average price of new vehicles has increased by 69% since 2019, leading to a significant rise in replacement costs. Additionally, vehicles are now equipped with numerous electronic components, which has caused a substantial increase in claim costs in the event of partial loss. This surge is mainly attributable to the cost of parts, labor, and technology. It is therefore clear that insurance premiums are bound to rise.

Home insurance policy – inflation and rising construction material costs
Materials such as drywall, concrete, paint, and insulation have seen their prices increase by approximately 20%. Inflation also affects labor costs for post-claim repairs.

Claim frequency
Even if you haven’t made a claim yourself, a general increase in claims in your region or among your insured group can drive rates up.

Natural disasters
More frequent climate events such as wildfires, floods, and severe storms—sometimes accompanied by tornadoes—also have a direct impact on insurance premiums. The number of claims related to extreme weather phenomena has more than doubled in Canada since 2010.

For over a decade, the cost of claims related to natural disasters in Canada has continued to rise. In 2024, it reached a record high of $9.1 billion, and over the past five years, the average has been $4.3 billion per year.

Policy changes
Some endorsements may have been added, adjusted, or replaced.

Could it be a mistake?
A technical error could explain an unjustified increase. If you received a correction notice, wait for the updated policy before making any payment.

How to reduce your premium

Home insurance

• Increase your deductible: A higher deductible lowers your monthly premium.
• Avoid minor claims: This protects your record and helps prevent future increases.
• Pay off your mortgage: A mortgage-free home or a notarized home equity line of credit may potentially lead to a reduction in insurance premiums.

Auto insurance

• Bundle your policies: Home + auto = multi-product discount.
• Check for missing discounts: Anti-theft systems, safe driving, etc.
• Review listed drivers: Remove occasional drivers who are no longer needed.
• Choose usage-based pricing: The less you drive, the less you pay.

In summary
Yes, in the current context, a premium increase is normal due to the various elements mentioned above. However, there are concrete ways to reduce it. Take the time to review your policy and coverage, and contact an Orbit insurance broker if you have any questions.

Sources :  

Canadian climate Institute

Insurance Bureau of Canada