Car insurance premiums in Canada have been getting more expensive every year since the pandemic, according to government data, and insurance experts believe prices will continue to drive up into 2026.
The recent spike in vehicle thefts over the past few years has stood out among the many factors that at least one expert says have contributed to higher prices for insurance premiums.
“Generally, as inflation has an impact on overall costs, insurance follows shortly behind,” says Daniel Ivans, licensed broker and insurance expert at Rates.ca.
“We see increasing costs in repair shops, increasing wages, auto theft over the last couple of years, so we’re also going to see insurance costs increase.”
Inflation, especially since the COVID-19 pandemic, has led to price spikes for just about everything, and insurance premiums are not immune to these cost pressures.
Prices for all goods and services increased an average of 2.2 per cent in October compared with a year earlier, according to the consumer price index, or CPI, from Statistics Canada.
The same report says October 2025 saw the cost of auto insurance premiums increase 7.3 per cent on average compared with a year earlier, which was more than three times the national average for all goods and services.
Since October 2020, prices for car insurance premiums have increased 18.9 per cent for passenger vehicles on average.
There are several factors contributing to these price hikes that are unique to the insurance industry, and specifically, automotive insurance.
Ivans says there are “a lot of moving pieces” that go into how car insurance premiums are calculated that vary greatly depending on the driver and their location.
In recent years, the lingering effects of the pandemic, including supply chain disruptions and labour shortages, snowballed into these higher costs, and tariffs add another dynamic.
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“During COVID, what we saw were a lot of, for example, parts shortages, which is when we saw a spike in the used car market,” Ivans says.
“Now with tariffs coming in 2025, we’ve seen supply chains impacted, labour shortages as a result of layoffs or relocations. These have all obviously impacted the auto insurance market quite a lot.”
Insurance premiums in Canada are also more expensive because of auto theft rates, despite the situation improving.
In the first half of 2025, auto theft fell 19 per cent compared with 2024, but Ivans says insurance rates, for the most part, have not come down at the same rate.
“We’ve discussed over the last couple of years now about auto theft, and while we do see auto thefts declining, they’re still near enough to record highs that they’re having an impact on overall rates.”
Industry experts at Équité Association say auto theft claims currently cost Canadians about $1 billion per year, which may be an improvement from previous years, as rates of auto theft have started to fall.
According to a report from Statistics Canada released in April, there were over $1.5 billion in auto theft claims in 2023, compared with $489 million in 2019.
Climate change is also playing a role in the rising rate of auto insurance premiums because disasters like floods and wildfires typically lead to more claims.
“Of course, climate change and the impact of claims as a result of, for example, hurricanes, major frosts, floods. We saw over $8 billion paid out last year in 2024 by the industry as a result of claims driven by climate,” Ivans says.
“We haven’t seen climate change slowing down at all this year, so all of these things are broadly impacting insurance premiums.”
Statistics Canada’s insurers report outlines how insurance companies have adapted to various changes that have forced some to adjust the premiums they offer customers to maintain their profit margins. Many of these factors have been felt across different types of insurance, including for homes and others.
“Canada’s property and casualty (P&C) insurers have faced many challenges in the past few years, impacted by the COVID-19 pandemic, a rise in thefts, and extreme weather,” Statistics Canada said in the report.
“These effects were made worse by inflationary pressures, leading to profitability concerns for insurers and price increases for consumers.”
The same report from Statistics Canada says Ontario and Alberta have comparably higher insurance rates, on average, than other provinces and territories. This is partly because these provinces have higher rates of auto theft, especially Ontario.
Although Ivans says insurance premiums likely won’t get any cheaper next year, he says the rate at which they are increasing will likely be lower than in previous years.
“We can anticipate seeing some increase, and of course, that is led by inflationary impacts, additional costs as a result of supply and supply chain shortages and things like that, but we’re not seeing potentially as big of increases as we’ve seen in the past,” Ivans says.
“Somewhere between four to six per cent, possibly, unless anything obviously changes. But we’re not seeing anything that’s driving premium change as aggressively as we have in the past with things like climate change, the surprise of auto theft increases and things like that.”
Ivans says that if demand for electric vehicles (EVs) continues to climb, that could come with more expensive premiums.
“The only other subset that might be a little bit more impacted might be EV owners, where the technology inside of vehicles makes them a little bit more complicated to repair, makes wait times a little bit longer, makes it a little harder to find the right professional,” Ivans says.
Automotive insurance requirements vary by province and territory, with some using private companies and others having government-issued insurance.
In provinces like B.C., Manitoba and Saskatchewan, government-issued insurance is mostly mandatory, while Quebec has a more hybrid model, and all other parts of Canada use a private system.
Where private insurance is available, Ivans suggests shopping around as much as possible to find the best rates, and making the most of multi-vehicle and bundling options to save even more.
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