How does inflation affect insurance in Canada?

This article was originally published on June 6, 2024, and was updated on December 15, 2025.

Inflation has become a part of everyday life in Canada. While you’re probably used to seeing the effects of inflation on your grocery receipts, you may also have noticed an unwelcome spike in the amount you’re paying for home and auto insurance.

Just how much more are Canadians paying for insurance? And what can be done to counteract the trend of rising insurance prices?

 

How much more are Canadians paying for insurance?

Insurance premiums aren’t immune to inflation. In fact, they make up part of the consumer price index (CPI), Canada’s best tool for measuring inflation. As the price of gas, groceries, and other essentials have risen, insurance costs have gone up just as much. This article uses data from the Transportation Consumer Price Index and the Shelter Consumer Price Index for November 2025 (released in December 2025).

Auto insurance premiums for passenger vehicles increased 6.1% from November 2024 to November 2025. This means a car insurance policy that cost $1,500 last year would jump to $1,591.50 this year – an increase of about $7.63 per month.  

Also read: Inflation in Canada: What it means for your auto insurance

Home insurance premiums have risen 5.8% in the same time frame. The good news is that the trend seems to have paused, at least for now. According to Marsh, a global insurance consulting firm, insurance rates in Canada fell by 3% in the third quarter of 2025. However, inflation is holding steady at 2.2%, just above the Bank of Canada’s 2% target, which could be reflected in insurance premiums going forward. 

Also read: How has inflation impacted home insurance rates in Canada?

Why are insurance prices up in Canada?

Insurance prices are up for two reasons: Canadians are filing more claims, and those claims are more expensive to pay out. In fact, 2024 was a record year for home insurance claims, costing Canada 8.5B in insured losses due to severe weather. As of September 2025, total insured losses due to severe weather events stand at $1.6 billion.

Unfortunately, natural disasters are becoming more common, with more Canadians affected by powerful storms, floods and wildfires. As these risks increase, insurance companies need more cash to cover the damage. Insurance companies are also paying more to settle home insurance claims. Inflation has driven up the cost of building materials and labour, resulting in higher prices passed on to consumers.

Also read: What to know about insurance during wildfire season

Meanwhile, auto insurance claims are up year over year, as the cost of car thefts remains a concern. According to Équité Association, a Canadian insurance industry advocacy group, more than 23,000 vehicles were stolen in Canada in the first half of 2025. While this reflects a 19.1% decrease compared to the same period in 2024, the cost to replace stolen vehicles remains high. In 2023, theft-related claims reached a record-breaking $1.5 billion, and 2024 is projected to also reach $1 billion based on reported mid-year totals.

Also read: How stolen vehicle trends can impact your auto insurance

Insurance companies are paying more to settle home insurance claims as well. Inflation has increased the cost of building materials and labour, leading to higher costs that are being passed on to consumers.

Will insurance prices continue to rise in 2026?

While the rate of inflation has fallen from its peak, insurance costs are expected to continue rising in 2026 and beyond. The number of claims is likely to continue growing, as is the cost of paying them out, which will both lead to higher prices. The rapid price increases should ease; however, as inflation continues to come under control, expect more measured price rises in the coming months and years.

Also read: Ratehub.ca’s insurance predictions for 2026

How can I protect myself against rising insurance premiums?

While there’s not much you can do to fight inflation, there are things within your control that can help to reduce your insurance costs. Consider these tips to reduce the amount you pay for insurance:

• Choose a higher deductible. The higher your deductible is, the lower your monthly payment will be. Choose the highest deductible you can afford on both your auto and home insurance policies.

• Select only the coverage you need. It’s a good idea to periodically review your insurance policies to make sure you have the coverage you need – and to ensure you’re not paying for coverage you can do without. Consider dropping collision coverage on older cars and removing contents insurance coverage for items you no longer own.

• Look for discounts. Many insurers offer discounts for safe driving practices, like using winter tires during the winter. You may also be eligible for discounts through your employer, alumni group, or other associations.

• Avoid making claims. The best insurance rates go to people who don’t make claims. Practice safe driving habits and take steps to protect your property against flooding to keep your insurance rates from going up.

Compare quotes online when shopping for a new policy or renewing your existing policy. Your current insurance company may not be offering you the best deal, so you could be wasting money when by renewing without checking prices. Be sure to compare insurance quotes online when your policy is up for renewal to find the best price for the coverage you need.

The bottom line

The cost of insurance in Canada isn’t just affected by inflation; it’s a driver of inflation. As claims become more common and more expensive, prices will continue to rise. Avoid paying more than you have to for home and auto insurance. Review your coverage, look for discounts, bundle policies when you can and be sure to compare insurance quotes online to get the best price.

Also read

• How stolen vehicle trends can impact your auto insurance
• What happens if your stolen car is actually found?
• Types of home insurance in Canada
• Mortgages and inflation: How do they affect each other?