Ontario home and vehicle insurance premiums could increase due to tariffs
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Ontario insurance rates on homes and vehicles will rise because of U.S. tariffs on Canadian products, according to digital insurance marketplace RATESDOTCA.
With a 25% tariff on steel set to take effect on March 12, some of the first industries to feel the effects of these tariffs will be automotive manufacturing and construction, both of which rely heavily on steel products.
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RATESDOTCA says any increase in production costs will cause a domino effect as it will drive increases in sales costs which in turn will drive claims costs higher for repairs and replacement, which in turn will push up insurance premiums over time.
“It will likely take some time for the effects of tariffs to work their way through the system, and the effects will depend on the length of time the tariffs are in place” says Daniel Ivans, RATESDOTCA insurance expert and licensed insurance broker, in a statement.
“Tariffs are likely to increase the cost of vehicles and homes, which will eventually make their way into insurance premium prices.”
Here’s how tariffs could affect auto and home insurance premiums, according to RATESDOTCA:
– There is a significant lag, often more than a year, between an event that affects the changes in auto insurance premium prices. In Ontario, auto insurance premiums are regulated, meaning that insurance companies must provide the reasons for their proposed premium increases, which are then submitted for approval to the Financial Services Regulatory Authority of Ontario (FSRA), a process that can take months.
– Home insurance premiums will reflect the changes more quickly as they aren’t regulated by an authoritative body such as FSRA.
– Auto insurance premiums have risen due to large claims losses from high rates of auto theft and inflation, while home insurance premiums are on the rise from catastrophic claims losses due to increasing extreme weather events such as floods, wildfires and hailstorms so any increase in premium prices from tariffs will likely be in addition to those.
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