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Why did my rates go up? Key factors in insurance premium increases

Your insurance company estimates an annual cost or premium to accept the risk of covering your vehicle/property. Premiums are based on how much money insurance companies think they will need to pay for the coming year’s claims. 

Using the pool of many premiums, your insurance company pays for the losses of the few who make claims in that year. If you haven’t made a claim or any changes to your policy during the year, your rates may have increased due to claims frequency and severity in your region.

Here is a high-level overview of what can impact the rate on your policies at new business and renewal times.


  • Technology in today’s vehicles costs more to repair: Many modern vehicles are built with advanced driver assistance systems that help keep you and your passengers safe. However, these systems are built with complex sensors and other digital components that are expensive to repair.

  • Distracted driving is on the rise: With the number of accidents from distracted driving increasing, the damage that occurs in these accidents also tends to be more severe and costly.

  • Car insurance fraud is affecting the entire industry: In Ontario alone, the Insurance Bureau of Canada reports that car insurance fraud costs drivers an estimated $1.6 billion each year (or about $236 per driver). Insurance companies are working to reduce instances of car insurance fraud and minimize the impact they have on customers.

  • Medical services are becoming more expensive: If you're in an accident, the cost of medical services is higher today than it has been in the past. Insurance companies must factor an overall increase in medical expenses into their premiums.

  • More people are commuting again: Across Canada, many people have returned to commuting to work since COVID-19 restrictions were lifted. This leads to more traffic and an increased risk for accidents, so auto premiums are rising in response, especially for drivers in urban areas and for those with lengthier daily commutes.

  • Inflation is playing a role in rising insurance rates: Rising inflation means car part prices and repair costs are increasing, making it more expensive to repair a vehicle after an accident.


  • Extreme weather events and catastrophes are more frequent: As forest fires, floods, storms, and other weather events become more frequent, they cause extensive damage, resulting in more costly claims.

  • Municipal infrastructure is getting older: Outdated municipal infrastructure and a higher demand for water make sewer backups more frequent, resulting in more damage-related claims.

  • Neighbourhood trends might put you at greater risk: When neighbourhoods grow, demographics and risks change. For example, if there is a new commercial development near your home, or a new subdivision emerges, this can alter municipal infrastructure. These are factors insurers look at when assessing risk.

  • Emergency services, skilled trades, and personal belongings are more expensive: Inflation also means higher prices for goods and services such as emergency services and labour costs for repairs, which translates to expensive claims.

  • Some new features are eco-friendly, but not budget-friendly: Eco-friendly features like solar panels, energy efficient windows and doors, and high-efficiency appliances are a great choice for our environment. However, if damaged, more expensive repairs are often required.

  • Modern homes cost more: Rising home prices and more homes with high-end features (e.g. pools and hot tubs) drive up replacement costs and liability claims.

  • Finished basements need more coverage: Since they’re made with higher-priced building materials, finished basements cost more to repair if sewer backup or other damage occurs.

For a full review of criteria that can impact your rates, or for questions surrounding your renewal & premiums, please contact our OTIP Broker Service team.

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