Posthaste: Why insurance premiums are surging in Canada — especially in these cities

Insurance costs

are surging in Canada, pushing this household expense up from just a “background bill to a core

cost-of-living pressure

,” says a new report.

Seventy-five per cent of households in the country reported premium increases in auto and home insurance, which have risen faster than wages and inflation, said

the Rates.ca report. 

“Insurance costs are becoming a much more noticeable part of household budgets,” said Daniel Ivans, insurance expert for the comparison site. “A combination of rising claim severity, more expensive vehicles, climate-driven weather losses, and persistent

auto theft

has pushed premiums higher across many parts of Ontario.”

Especially in Toronto, where combined auto and home premiums have climbed from $4,850 in 2022 to $5,693 in 2025. That adds up to about five per cent of the city’s median after‑tax income.

“For context, in 2023, the average household spent $8,659 on groceries, meaning the 2025 insurance bill is more than half of a year’s grocery spending,” said the report.

Premiums for both auto and home insurance are more expensive here because Toronto and its surrounding area is a hot spot for auto thefts. Traffic congestion drives up collision and repair costs and the region has suffered a rise in water damage, which is now the leading cause of property claims, said Rates.ca.

Ottawa, on the other hand, is the most affordable city in the province for insurance costs. Households here pay about three per cent of the city’s median income.

Torontonians may pay more, but other Ontario cities have experienced steeper increases. From 2022 to 2025, combined premiums soared 37 per cent in Oshawa, 35 per cent in London and 34 per cent in Windsor.

In 2024 alone,

auto premiums

spiked 17 per cent and home premiums, 25 per cent in London, Ont.

Auto premiums have gone up because of rising costs to repair and buy vehicles, said Rates.ca. The cost of auto parts, maintenance and repairs climbed over 22 per cent from 2019 to 2024 and the price of new vehicles jumped more than 60 per cent and used vehicles over 80 per cent.

Dan Park, chief executive of Clutch Canada, an online used-car retailer, said higher premiums are affecting auto sales.

“High premiums deter buyers and can stop deals altogether,” he said. “Particularly among newer or less experienced drivers, some are seeing insurance quotes that rival or even exceed their monthly vehicle finance payment, and in those cases, they’re choosing to walk away from the purchase entirely.”

Property insurance faces even more pressure, said the study. In 2024 Canada racked up a record $8.5 billion in severe weather damage, 12 times the average in the early 2000s.

“The past 5 to 10 years have shown just how much home insurance exposure has intensified. The risks are very real, and the industry is feeling it,” said Ivans.

What are Canadians doing about it?

The report says two thirds of consumers took action to offset premium increases by shopping around, asking for discounts or removing parts of their coverage.

Ivans cautions against the latter, which can prove more expensive down the road, but said consumers can save up to 30 per cent by bundling home and auto insurance or more than one vehicle or getting usage-based insurance (telematics).

Shopping around can also work in your favour.

“Insurance companies have peaks and valleys,” he said. “Find the company in a ‘valley.’”

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February’s

inflation rate was cooler

than expected, but thanks to the Iran conflict that reading was past its sell-by date before it hit the presses Monday.

“The readings are as stale as week old bread sitting on the discount shelf and headed for the pigeons,” said Derek Holt, head of Scotiabank’s capital markets economics.

The conflict in Iran that blew up on Feb. 28 has hiked oil prices by 45 per cent and with them inflation forecasts.

Economists now expect inflation to hit 3 per cent in coming months as soaring crude prices filter through to the economy.

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• The United States is losing its grip on Canada’s steel market
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Back in the summer of 2008 — or just before the great financial crisis — two unsettling financial trends collided: oil prices surged to almost US$150 a barrel and private funds holding subprime mortgages reported mounting losses.

Sound familiar?

Today oil prices are again shooting into the triple digits while bad news and warnings mount about private credit funds.

Should investors worry about a 2008-style systemic shock?

Find out more.

Interested in energy? The subscriber-only FP West: Energy Insider newsletter brings you exclusive reporting and in-depth analysis on  one of the country’s most important sectors.

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McLister on mortgages

Want to learn more about mortgages? Mortgage strategist Robert McLister’s

Financial Post column

can help navigate the complex sector, from the latest trends to financing opportunities you won’t want to miss. Plus check his

mortgage rate page

for Canada’s lowest national mortgage rates, updated daily.

Financial Post on YouTube

Visit the Financial Post’s

YouTube channel

for interviews with Canada’s leading experts in business, economics, housing, the energy sector and more.

Today’s Posthaste was written by Pamela Heaven with additional reporting from Financial Post staff, The Canadian Press and Bloomberg.

Have a story idea, pitch, embargoed report, or a suggestion for this newsletter? Email us at 

posthaste@postmedia.com

.

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