If you drive a car in Ontario, you may be in for some sticker shock when it comes time to renew your auto insurance policy. Many insurance companies are planning to raise rates in the coming months. Industry insiders say this trend is also likely to continue. If you have to renew your car insurance any time soon, prepare for a possible rate increase on your renewal notice. In this article, we explain the reasons for auto insurance increases in 2026 and offer some tips on how to lower your premiums to perhaps offset the predicted increase.
With inflation at its highest in decades, higher car insurance premiums will be another hit to the wallets of Ontario consumers. Some Ontario drivers are expected to pay more for their auto insurance this year. The Financial Services Regulatory Authority of Ontario (FSRAO)—the government body that oversees the province’s private insurers—is responsible for vetting companies’ requests to proceed with rate hikes. And many insurers have been filing them. As of October 2025, auto insurance premiums rose 7.3% year-over-year.
However, Ontario is preparing for major auto-insurance reforms that take effect in July 2026.
The effect of rate increases on insurance
Insurance providers are seeking another rate increase because their costs are rising. Inflation, labour and supply-chain shortages, and a post-acute pandemic return to the roads are driving up the amount insurers must pay out in claims. With ongoing supply shortages in the auto industry, including catalytic converters and windshields, the cost of auto parts is rising. In addition, wait times for those parts are increasing, and prices and demand for rental vehicles are rising.
Let’s breakdown the main reasons for auto insurance increases:
1. Claims costs continue to grow
Auto insurance rates are partly based on insurers’ claims costs, which are affected by inflation, and supply-chain pressures have driven up labour, repair, and replacement parts costs. Therefore, these would continue to push premium prices upward.
2. Repair and replacement costs
Inflation is driving up the cost of new, used and rental cars, as well as car parts. Lingering supply chain issues are making it hard to get parts on time. High demand and low supply often lead to price hikes, particularly for auto services and parts. The increasingly complex design of cars has made them more difficult to repair.
3. Ongoing auto theft
To say that Ontario has a car theft problem is an understatement. Vehicle theft has been one of the most significant causes of rising premiums in recent times. Although data collected in early 2025 showed some decrease in activity, thefts still remain alarmingly high. Car thieves continue to target catalytic converters as prized, lucrative items in your vehicle. Although it is not a new issue, such theft cases remain problematic for car owners nationwide.
4. Cost of health care and litigation
The cost of providing health care to accident victims, including rehabilitation and disability benefits, is another factor that is driving up insurance companies’ costs. Two major components figure into premium costs: half is replacement/repair costs, and the other is personal-injury-related costs.
There are a number of things you can do to ease the pain of rising insurance rates:
- Shop around and compare rates. Unlike other provinces across Canada that have a single, public insurer, Ontario has dozens of companies that offer car insurance. This makes it possible to compare plans and prices. Speak to an isure broker to help find a rate that works for you!
- Telematics. If you’re confident in your driving abilities and perhaps don’t spend that much time on the road, it may be worth looking into usage-based programs that provide discounts based on driving behaviour.
- Reduce coverage. Drivers of older cars with little market value may want to consider not purchasing optional add-on coverage, like collision and comprehensive coverage.
- Increase your deductible. Increasing the deductible from, say, $200 to $500 on your auto insurance can reduce collision and comprehensive coverage premium costs. Going to a $1,000 deductible may save you even more!
If you are notified that your rates will increase at renewal, be sure to use the 30- to 60-day notice period to shop around and see what other offers are available, as not all insurers offer the same policy.
Discounts
Your isure broker or agent might also be able to spot if you’re eligible for a group or additional discount(s).
- Alumni group discount. If you graduated from a particular college or university, you may be eligible for a group discount.
- Bundling your home and auto insurance can save you money!
- Multi-vehicle discount. If your household has multiple vehicles and you place them on the same policy, you can save.
- Install winter tires. Many insurance companies will offer a discount to drivers who purchase and install winter tires.
- Affinity programs. People can often access discounts through organizations, associations, nonprofits, and clubs.
- Decide not to drive. While many experts predict that consumer driving will increase post-pandemic, some contend that rising prices may discourage drivers from hitting the road. Taking into account gas prices, the convenience of working from home, and the inflationary environment, the number of kilometres driven may be reduced.
For a full list of available automotive discounts, please click here.
Insurance endorsements
Auto insurance endorsements allow you to customize your coverage:
- Increase or decrease coverage limits
- Deduct certain parts (in allowance by law) to lower the total premium amount
- Change your personal information
- Make other special amendments to restrict or expand certain terms covered by your car insurance policy, giving you more flexibility
Final thoughts on auto insurance increases
Inflation will impact auto insurance rates, just like it does every other industry. It’s just a matter of when consumers will see that rate change. You can check whether your insurer has been approved for a rate increase on the FSRAO website, though it’s important to note that the percentage listed on this page is the maximum increase an insurer has been approved for, and your rate may be increased by less. For more information about possible reasons for auto premium increases in 2026, contact our offices today and speak with one of our isure representatives about your rates.
Drive with Confidence
Request your free car insurance quote now and get the coverage you deserve.
Insurance in Canada is changing fast, and 2026 will bring Read more
As an Ontario resident, you are required to legally carry Read more
At isure, we care about our customers! Read our full Read more
