Ontario residents could soon face higher home and vehicle insurance premiums due to U.S. tariffs on Canadian products, according to a recent announcement from the digital insurance marketplace RATESDOTCA.
The tariffs, including a 25% levy on steel set to take effect on March 12, are expected to hit the automotive manufacturing and construction industries first, as both heavily rely on steel.
“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,” stated Daniel Ivans, RATESDOTCA insurance expert and licensed insurance broker.
Ivans explained that any increase in production costs will trigger a ripple effect. Higher manufacturing costs in these key sectors will lead to increased sales costs, which will subsequently drive up claims costs for repairs and replacements. Over time, this will inevitably lead to higher insurance premiums.
According to RATESDOTCA, here’s how the tariffs are likely to affect auto and home insurance premiums:
- There is a significant lag, often more than a year, between events affecting auto insurance premium changes. Regulated in Ontario, insurance companies must submit reasons for proposed increases to the Financial Services Regulatory Authority of Ontario (FSRA). This approval process can take months.
- Home insurance premiums will likely reflect the changes more quickly, as they are not regulated by a body like FSRA.
Notably, auto insurance premiums have already seen increases due to significant claims losses stemming from a rise in auto theft and inflation. Similarly, home insurance premiums have been climbing due to catastrophic claims losses resulting from extreme weather events like floods, wildfires, and hailstorms. Any increase in premium prices related to the tariffs would likely be in addition to these existing factors.
