Auto insurance rates are not arbitrary numbers that insurance providers come up with and charge on their clients. They are meticulously thought out using an individual’s personal information and claim data. They then use their algorithms to estimate how likely you are to file a claim. The riskier you to make claims the higher your insurance rates. Over the years, LowestRates.ca has seen the quoted price for auto insurance rise across Canada attributable to various factors across the board. Some regions such as Alberta, Ontario and Atlantic Canada are more affected than others. Here are a couple of reasons that have contributed to this spike.
- Increase in high-cost collisions
By default, accidents trigger claims. Research from law enforcement shows that there is an increase in distracted drivers, thus more collisions happening on the road now and then. Furthermore, the cost of repairing these fender benders has gone up significantly. The spare parts needed to fix the damage are more expensive these days thus leading to more claim required, which eventually leads to a rise in the insurance rates.
There are a couple of people who stand to benefit from insurance claims. Some health officers and legal counsel charge more when they realize one has insurance to claim. They take advantage of it because they know the insurance covers total damage. Another thing is the increased number of people filing lawsuits for minimal accidents, and insurance claims include legal fees. For this reason, insurance companies end up increasing auto insurance rates.
There is evidence of cheating going on in the insurance system of Ontario. Right from the tow truck towing away the damaged vehicle on the scene to medics who try to defraud insurance companies. Body shops are also in the defrauding scheme when one wants to repair the car. With all these fraud challenges, LowestRates.ca has seen the quoted price for auto insurance rise across Canada, and the burden falls to the insured person who pays higher auto insurance.
- Theft increase
Research from Powers shows a notable increase in car theft in some areas of Canada, especially the rural area of Alberta. It makes Alberta car owners high-risk clients, and thus, they are forced to pay high auto insurance rates.
- Severe weather conditions
Floods are known to damage car parts and in some extreme cases leave the car completely useless thus, the insurance company ultimately writes it off. LowestRates.ca has seen the quoted price for auto insurance rise across Canada because of the increase in adverse weather conditions. It is one of those factors that are entirely out of the car owner’s control, but it leaves the auto insurance providers no option but to spike up the rates.
As much as some of these factors are beyond the car owner’s control, such as bad weather and perhaps some accidents, the insurance providers still have to take measures to protect themselves against risk. The rates have to spike one way or another. Furthermore, two major players in the insurance sector left the Canadian market. It inflicted pressure on the remaining smaller companies who do not have established networks in some of the provinces.