Car insurance Insurance premiums in Canada have become more expensive every year since the pandemic, and insurance experts believe prices will continue to rise in 2026, according to government data.
Recent surge vehicle theft over the past few years stands out among many factors that at least one expert believes have contributed to higher insurance premium prices.
“In general, as inflation impacts overall costs, insurance lags a little,” says Daniel Evans, a licensed broker and insurance expert at Rates.ca..
“Over the last couple of years, we've seen rising costs in repair shops, rising wages, rising auto thefts, so we'll also see rising insurance costs.”
How much more expensive is car insurance now?
Inflationespecially since the COVID-19 pandemic has caused prices for almost everything to spike, and insurance premiums are not immune to these price pressures.
Prices for all goods and services rose an average of 2.2 percent in October compared with a year earlier, the data showed. Consumer Price Index, or CPI, from Statistics Canada..
The same report found that in October 2025, auto insurance premium costs rose an average of 7.3 percent from a year earlier, more than three times the national average for all products and services.
Since October 2020, auto insurance premium prices for passenger cars have increased by an average of 18.9%.
There are several factors contributing to higher prices that are unique to the insurance industry, particularly auto insurance.
Why have premiums increased so much?
Evans says there are “a lot of moving parts” in calculating auto insurance premiums that vary greatly depending on the driver and their location.
In recent years, the lingering effects of the pandemic, including supply chain disruptions and labor shortages, have driven up costs, and tariffs have added another dynamic.
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“During COVID, we saw parts shortages, for example, and that's when we saw a surge in the used car market,” Evans says.
“Now that the tariffs are set to go into effect in 2025, we've seen impacts on supply chains, labor shortages due to layoffs or relocations. All of that has obviously had a pretty significant impact on the auto insurance market.”
Insurance premiums in Canada are also rising due to an increase in car thefts, even as the situation improves.
In the first half of 2025 Car thefts are down 19 percent compared to 2024but Evans says insurance rates, for the most part, have not fallen at the same rate.
“Over the past few years we have been discussing the issue of car thefts and while we are seeing car thefts going down, they are still close enough to all-time highs that they are having an impact on the overall numbers.”
Industry experts from the Equity Association say Car theft claims currently cost Canadians approximately $1 billion a year. which may be an improvement over previous years as car theft rates have begun to fall.
According to Statistics Canada report released in AprilAuto theft claims totaled more than $1.5 billion in 2023, up from $489 million in 2019.
Climate change also plays a role in rising auto insurance premiums, as natural disasters such as floods and wildfires typically result in more claims.
“Certainly climate change and the impact of claims from, for example, hurricanes, extreme cold, floods. We saw the industry pay out over $8 billion last year in 2024 as a result of climate-related claims,” Evans says.
“We haven’t seen climate change slow down this year, so all of these factors are having a big impact on insurance premiums.”
Statistics Canada's insurer report shows how insurers have adapted to various changes that have forced some to adjust the premiums they offer customers to maintain their profits. Many of these factors are felt across different types of insurance, including home insurance and other types of insurance.
“Over the past few years, Canadian property and casualty (P&C) insurers have faced many challenges caused by the COVID-19 pandemic, an increase in thefts and extreme weather conditions,” Statistics Canada said in a report.
“These effects have been compounded by inflationary pressures, leading to profitability challenges for insurers and rising prices for consumers.”
The same Statistics Canada report found that Ontario and Alberta have comparatively higher insurance rates on average than other provinces and territories. This is partly because these provinces, especially Ontario, have higher rates of car theft.
Could premiums rise again in 2026?
While Evans says insurance premiums likely won't get cheaper next year, he says the rate of increase will likely be lower than in previous years.
“We can expect some increase, and of course that's driven by inflationary implications, additional costs from tight supplies and supply chains and things like that, but we're not seeing potentially as much increase as we've seen in the past,” Evans says.
“Probably somewhere between four and six percent, unless something clearly changes. But we don't see anything that would lead to such aggressive changes in premiums as we have seen in the past with things like climate change, an increase in unexpected car thefts and the like.”
Evans says that if the demand for electric vehicles (EV) continues to rise, which could lead to higher premiums.
“The only group of people that might be impacted a little more are electric vehicle owners, where the technology inside the vehicles makes them a little more difficult to repair, makes the wait time a little longer, and makes it a little harder to find the right technician,” Evans says.
How to save on car insurance
Car insurance requirements vary by province and territory, with some using private companies and others having government insurance.
Provinces like British Columbia, Manitoba and Saskatchewan mostly make public insurance compulsory, while Quebec has a more hybrid model and the rest of Canada uses a private system.
Where private insurance is available, Evans suggests shopping around as much as possible to find the best rates, and making the most of multi-vehicle and package options to save even more.
