Auto insurance premiums rising: Here’s what you can do to trim the bill

Canada’s auto theft problem might be showing signs of easing, but drivers are likely to continue feeling the pinch on their insurance premiums, experts tell Global News.

Nearly half (48 per cent) of respondents to a recent Ratehub.ca survey said they’ve faced a “significant” increase in auto insurance premiums recently.

However, there are some steps individual drivers can take to pump the brakes on rising costs, experts say, both before and after driving off the dealership lot.

Canada’s reputation for car thefts has been less than stellar, with a recent Interpol report listing the country among the top 10 for stolen vehicle reports.

The situation has led to a surge in payouts from insurers. Private auto insurance firms paid out $1.5 billion from theft claims last year, an increase of 254 per cent from 2018 levels, according to the Insurance Bureau of Canada. In Ontario, those costs surged past $1 billion for the first time, an increase of 524 per cent.

Morgan Roberts, vice-president of RH Insurance, says car theft has always been present in her 15 years as a broker in the industry, but recent years have been another thing altogether.

“It’s been astronomical. There’s been more theft than I’ve ever dealt with in my career. So that definitely does have a cost in the insurance industry as well,” she tells Global News.

Car thefts have received their fair share of attention from the federal and provincial governments and law enforcement in the past year, and there are signs of improvement.

A new report published by the non-profit Équité Association on Tuesday showed a 17 per cent national decline in auto theft in the first six months of 2024 compared with the same period last year.

But premiums don’t rise immediately in response to what’s happening today, it’s usually a matter of looking at the past, says Adam Mitchell, CEO of Mitch Insurance.

When claims surge, there’s a delayed impact after which insurers start to raise premiums on affected consumers’ policies, he explains. Insurers need to book those claims and prove to regulators that they’re incurring those losses before they can fully jack up premiums to cover them.

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Insurance functions as a large pot of cash that many pay into so the few are covered when they need to make a claim. The more withdrawals come out of that pot, the bigger that pot must become in the form of rising premiums, Mitchell says.

Even if your driving record has remained clean, you might see your premiums rise as a result.

“It’s OK to get your head around the idea that you didn’t necessarily do anything wrong. The environment changed,” he says.

Mitchell says the cost of buying a particular car needs to be considered with the insurance premiums in mind, as more commonly stolen cars will cost more to insure.

“If you’re shopping for a car, directly or indirectly, you’re shopping for insurance as well,” he says.

Équité Association’s list of the 10 most commonly stolen cars in Canada for 2022 saw the Honda CR-V top the list. The Dodge RAM 1500 Series, the Ford F150 Series, the Lexus RS Series and the Toyota Highlander rounded out the top five, with varying model years stolen more than others within each vehicle type.

Mitchell adds this process can be challenging, though, as firms will have a “dynamic” list of the vehicles that are at high risk of being stolen, with different insurers highlighting different cars to stay competitive with one another.

Where you live can also be a risk factor that drives up premiums, with affluent neighbourhoods full of pricey SUVs often serving as a hotbed for thieves.

“It used to be the most desirable insurance customers were people with great credit ratings and lots of assets living in nice areas,” Mitchell says. “Well, guess where the thieves have decided to go shopping for all these wonderful toys and trinkets?”

Comparator site Ratehub.ca, associated with RH Insurance, published a survey in June of Canadians’ attitudes towards auto insurance and ways that they’re trying to save. The firm polled 1,250 adults via an online panel between April 8 and May 12.

Some 57 per cent of respondents said they’ve changed insurance providers because of a price hike, with three in five saying they’d consider opting out of some level of coverage just to get a lower rate.

Roughly two-thirds of drivers said they’re comparing car insurance quotes and shopping around to save, while 58 per cent bundled multiple insurance products and 41 per cent raised their deductible.

Beyond working with a broker to compare multiple insurers at once, Roberts recommends asking if firms will offer discounts for installing certain anti-theft technologies like a tag system that will help to track a vehicle if stolen.

But she also recommends getting insurance that’s the right fit for your vehicle and needs so that in the event of a theft, you receive the payout you actually need.

“I always recommend calling into your broker and going through your life at that time, like what you do with the car, what you need the car for, just so that it is properly rated. So in the event of a loss, it’s no hiccup,” she says.

Mitchell says parking in a garage wherever possible is a good deterrent for thieves, as are physical immobilizers or “the club” steering wheel lock.

He imagines, however, that the ultimate solutions to vehicle theft will have to come from the manufacturers themselves. Facial identity, two-factor authentication or cars that are only unlocked with your smartphone, for example, could be employed in the same way they’re applied to online accounts and personal devices today.

But Mitchell warns that there are lagged effects here, too, and that automakers will only start to implement these tools once auto theft hits their own bottom lines — namely, if consumers stop buying commonly stolen models.

Rising insurance premiums have 74 per cent of those who don’t own a car questioning their ability to own any vehicle in the future, according to the Ratehub survey.

Mitchell says some drivers and vehicles may end up uninsurable in the future if car theft trends remain elevated.

That’s a consequence that he doesn’t think has been fully realized in the market.

Rather than an idea that it’s consumers versus the insurers or the manufacturers, Mitchell argues that the consequences of auto theft are leading to rising challenges across the industry. He says the ripple effects of rising auto theft are a “deep problem” that players at all levels will be grappling with for years to come.

“Buckle up and realize, we’re in this together,” he says.