Over half of Canadians are switching auto insurance providers due to rising premiums

Auto insurance premiums are on the rise in Canada – and that’s causing drivers to make some changes.

A recent auto insurance survey conducted by Ratehub.ca, which polled 1,250 Canadians on their attitudes towards the auto insurance industry, found nearly half have been impacted by a “substantial” increase to their payments – and many without an explanation as to why.

As a result, a good chunk of policyholders are jumping ship; a total of 57% of respondents have changed insurance providers in response to a price increase.

Higher costs are also impacting some Canadians’ ability to own a vehicle at all; 74% of former policyholders who no longer own or operate a vehicle are second-guessing their ability to own a car in the future.

Click here to see the full 2024 Ratehub.ca auto insurance survey results

New tech, thefts, behind premium hikes

Matt Hands, VP of Insurance at Ratehub.ca, says it’s “not surprising” that nearly half of those surveyed have experienced an increase, given there are a number of factors that have contributed to recent rate hikes from insurers.

“Several factors contribute to these rate hikes. One major reason is the rising cost of vehicles and their repairs,” he says. “Vehicles today are equipped with advanced technology and safety features, making initial purchase prices and repairs more expensive. Another contributing factor is the surge in auto thefts across Canada, particularly in provinces like Ontario, where auto theft claims costs increased by 524% between 2018 and 2023."

Theft claims exceeded $1.5 billion in costs in 2023, according to the Insurance Bureau of Canada, also prompting the Government of Canada to roll out a new National Action Plan to combat auto theft earlier this month. 

Also read: The top 10 most stolen vehicles in Canada

"Increases in comprehensive insurance claims, such as auto theft, impact both insurance companies and drivers,” says Hands. “This makes it increasingly difficult for consumers to find competitive rates and options. Due to these factors, it’s unsurprising that 74% of former policyholders who no longer own or operate a vehicle are second-guessing their ability to own a car in the future."

"Insurance fraud also plays a significant role in this pricing increase, as fraudulent claims drive up overall costs for insurers, which are then passed on to consumers."

Beware of the risks of opting out

The survey also found that drivers are willing to cut corners in order to reduce costs; a total of 60% of respondents said they’d consider opting out of specific insurance coverages to get a lower rate.

However, this can come with some unexpected risks, and drivers must be informed of how they’ll be impacted in the case of an accident, says Morgan Roberts, VP of RH Insurance.

"Of the 60% of drivers considering opting out of specific coverage, many might not realize the full extent of what they’re losing, making the savings not worth it. It's crucial for drivers to understand the implications,” she says. “For example, opting out of direct compensation property damage (DCPD) in Ontario means forfeiting coverage for not-at-fault accidents. If you're not at fault, you won't be reimbursed for the replacement value of your vehicle, repair costs, towing costs, or any other damages."

Other ways to reduce auto insurance premiums

The survey finds that policyholders looking to lower their auto insurance premiums also took the following measures to do so:

• 67% of drivers compared car insurance quotes and shopped around
• 64% of drivers maintained a clean driving record
• 58% of drivers bundled multiple insurance products
• 41% of drivers increased their deductible

“It’s evident that drivers are facing increasing premiums and are exploring options to lower their premiums,” Roberts adds. “Almost 67% of drivers have compared car insurance quotes and shopped around. This can be one of the most effective ways to reduce auto insurance premiums, as insurance companies use similar pricing factors but weigh them differently, causing rates to vary. Comparing quotes from multiple insurers can help you find the best price for your situation."

Additional survey highlights

Cost is king: Premium cost was the top-cited factor that influenced drivers’ choice of insurance provider, at 50.3% of respondents. This was followed by online reviews (15.3%), coverage amount and options (11.7%), and recommendations from friends and family (11%). The reputation of the insurer and customer service were among the lowest-rated factors, at 6.6% and 6%, respectively.

Most policyholders don’t know why their premium increased: When asked what the reason was for their most recent auto premium increase, a whopping 75% of respondents said they weren’t given one. That was followed by those who reported getting a new vehicle (10%), and those who submitted a claim (7%). Rounding out the bottom three reasons were:

• Changing their policy / adding additional coverage: 4%
• Moving to a new location (2%)
• Getting a traffic ticket (2%)

Most Canadians are concerned about auto theft: When asked about their feelings on growing instances of car theft, over half (55.2%) of respondents said they were at least moderately concerned; 16.9% reported being “very concerned”, while 10% said they were “extremely concerned”.

However, as many as 32.9% of respondents said they “weren’t sure” if their auto insurance policy covers theft.

The bottom line

While shopping around for the best auto insurance rate is the most effective way to know your options and find the lowest-priced coverage, it also pays to keep good driving habits, says Roberts.

“Other significant ways to reduce auto premiums include maintaining a clean driving record, increasing your deductible, and bundling your auto insurance with other policies, such as home insurance or tenant insurance,” she says.

Also read:

• What does optional DCPD mean for Ontario drivers?
• What DCPD auto insurance means for Alberta drivers
• What happens if your stolen car is actually found?