This year, Canadians are seeing increases on their policies, whether they’re making claims or not. The question most Canadians are asking is, “why is this happening”? It can be frustrating to see costs go up without a real explanation from your insurance company, but not to worry! The team at Nicol Insurance works hard every day to stay on top of industry changes and we’re always happy to help explain what is happening in the insurance world. After all, your broker is here to make sure you understand your policy, and that it always reflects your lifestyle!
First of all, it’s important to remember that your insurance rate isn’t just the result of your personal insurance history. While your rates may be affected whenever you place a claim, there are a lot more factors to consider. For example, if you live in an area where vandalism or auto theft is more likely, your insurance provider takes on a bigger risk for insuring your vehicle, which results in a higher rate. Likewise, if you live in an area that is more likely to experience heavy hail or flooding, your home is more likely to be damaged, increasing its risk and cost to insure. These factors are largely outside of your control but are still important in determining the risk your insurance provider faces.
With that in mind, there are several trends that have developed in the past few years which are driving up rates for consumers across the country. Here is a breakdown of the basics to give you a better understanding of the mystery behind recent insurance increases.
- The largest factor for rising insurance rates is an increase in expensive technology integrated into our vehicles. Cars are now being built with onboard computer systems, sensors and cameras, which is a substantial cost to repair if damaged. While that rear backup camera is a useful tool, you have to account for the cost of replacement, installation and calibration with the vehicle’s computer system if they are damaged. These kinds of repairs require specialized training and tools to complete, expensive electronic parts and additional labour costs.
- Smart Technology is being installed in homes at a higher rate than ever. Just like with your vehicle, these fancy gadgets are very convenient, but much more expensive to replace and repair. With smart home technology, solar panels, and high-efficiency appliances installed in your home, your insurance provider takes on a higher risk in keeping you insured.
- Without a doubt, distracted drivers are increasing your insurance rates. More people than ever are texting, talking and checking their phones for updates while they drive, resulting in a much higher likelihood of vehicle collisions across the board. It’s no wonder that insurance providers have increased their rates in response.
- Our country is facing an increase of frequency for catastrophic weather events, impacting both home and auto rates. Damaging winds, powerful storms and extreme temperature changes are wearing down the lifespan of our homes and vehicles, while increasing their risk of being outright damaged. This has forced insurance providers to increase all rates to recover the losses.
- Many of our oldest buildings, roadways and infrastructure are beginning to fall apart. If you live in an area with aging amenities, you will be more likely to place a claim, and are therefore a higher risk.
- Our country is also currently facing a skilled labour shortage. Without enough workers to repair our damaged buildings and infrastructure, it takes more time and costs more money than ever to do the work. As a result, construction companies charge a higher rate for their services, so insurance providers need to pay more to settle claims.
These are just a few examples of what could be increasing your insurance rates, but there are many more factors that your insurance provider considers when they review your policy every year. If you’re ever unsure of your rates or coverage, call your broker at Nicol Insurance! We’re here to help you understand your policy front-to-back. And if you’re unsatisfied with your current rates, we’ll be able to outline all of the options available to you. We’re here to help!