Why does my car insurance cost more?
Car insurance is expensive for some people. And many of them don’t understand why its cost can increase. The following reasons explain why.
1. Repair costs on the rise
Given that cars are essentially computers on four wheels, they are becoming more and more expensive to repair or replace: ubiquitous technology, scarcity and price of replacement parts and rising labour costs are all driving up the bill.
In 2012, the cost to repair a car after a collision was $4,074. In 2022, this cost was $7,024, i.e., a 72% increase. Such an increase inevitably has an impact on the cost of car insurance.
2. Frequency of claims
Auto insurers pay for their clients’ claims by drawing from the premiums it charges to all their policyholders. If the number and cost of claims rise, all drivers premiums are likely to increase.
The way we drive as a collective affects the premium we pay as individuals.
3. Premiums required to pay a claim
The average cost of car insurance in Quebec is $796.1 However, if you’re involved in a collision, it costs the insurer an average of $7,024 to compensate you. Do the math: That’s almost 9 times the amount paid individually!
How do insurers make ends meet? The premiums paid by all of an insurance company’s clients are used to compensate those who have an accident. That’s how insurance works. The increase in the cost of claims and premiums ends up affecting all drivers.
1 This cost includes private insurance for property damage and public insurance for bodily injury provided by the SAAQ.
If you’re unhappy with the cost of your insurance, there are several simple things you can do to pay less or avoid making a claim:
auto insurance
financial literacy
claims
