Annual insurance costs have rapidly increased for Ontarians across the province. What was once a background bill for Canadians has become a core finance bill. From climate-driven weather losses and rising auto thefts to higher vehicle prices, auto and home premiums have been steadily increasing. Let’s take a look at the rise in insurance prices and just how much the annual insurance costs in Ontario affect citizens today.
Annual Insurance Costs: Toronto Residents Pay The Most On Insurance Over The Past Four Years
Across six major Ontario cities, annual insurance costs rose each year from 2022 to 2025. However, not every city rose at the same pace. As expected, Toronto households faced the highest costs. The Ontario capital’s combined insurance costs grows from $4,850 in 2022 to $5,693 in 2025 alone. As a result, each household’s annual premium represented about 5% of the city’s median after-tax income of $122,735.
To put this into perspective, the average household spent $8,659 on groceries in 2023. This means their annual insurance costs for 2025 are more than half of a year’s grocery spending. Over four years, they paid a total of $20,946. On the other hand, Ottawa remains the most affordable city for annual insurance costs. Households in Ottawa paid roughly $14,401 over four years. This is equal to 3% of the median household after-tax income in Canada in 2025. Other cities, such as Hamilton and Windsor, were on the higher end of insurance costs.
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Who Pays The Most For Insurance And Why?
By the end of 2025, going into 2026, Toronto homes now spend, on average, close to $6,000 a year on insurance. This ranks it the highest among the six cities where data was collected. Why? Claims in Toronto are not only more frequent, but also more expensive. This makes insurance another expense for a city that is already terribly expensive to live in.
Meanwhile, auto insurers haven’t been able to charge enough to cover rising losses. Auto rates must be reviewed and approved by the Financial Services Regulatory Authority of Ontario (FSRA), which can delay insurers’ ability to respond to rising annual insurance costs.
According to Daniel Ivans, a Rates.ca insurance expert, as market pressures intensify, they inevitably translate into noticeable rate spikes when rate approvals lag actual loss trends.
Toronto and Hamilton also face higher risks. This is because they are hotspots for auto theft and have dense traffic, which drives up collision and repair costs. To add to this, they both see a rise in water-damage claims, the leading cause of property losses according to Statistics Canada. Both of these factors push their citizens’ annual insurance costs higher than those in other cities.
Annual Insurance Costs For Ontarians Spike Sharply From 2022 To 2025
Across all six cities, annual insurance costs rose sharply from 2022 to 2025. The largest increases were in Ottawa (+37%), London (+35%), Ottawa (+35%), and Windsor (+34%). On the other hand, Hamilton (+21%) and Toronto (+17%) saw slower growth, though still significant.
Country-wide, insurers face claims costs rising faster than the timing of rate filings. According to Statistics Canada, auto parts, maintenance, and repair costs have increased by 22.3% from 2019 to 2024. Median new-vehicle prices also rose 61.5%, while used vehicles rose by 82.2%. Both lead to more expensive insurance claims.
According to FSRA, persistent inflation in parts and labour, as well as rising auto theft, continue to put pressure on the rising auto-claims costs in Ontario. To add to this, vehicle technology continues to advance over time. When these issues arise, Ontarians’ annual insurance costs rise.
Insurers in Ontario must apply to FSRA for any rate changes, as well as support them with recent claims data. Because of this, approvals can end up lagging when cost pressures aren’t yet reflected in the historical data that is used in filings.
Annual Insurance Costs: 2024 Delivered Steepest Year For Premium Increases
Across all Ontario cities, 2024 delivered the steepest rise in annual insurance costs. London, for example, saw auto premiums rise to 17% and home premiums by 25%. Windsor and Ottawa both saw recorded auto increases above 18%.
In 2024, homes and properties faced the biggest pressures when it came to annual insurance costs. Canada recorded over $8.5 billion in severe-weather losses in 2024, according to the Insurance Bureau of Canada (IBC). This is the highest recorded severe-weather losses ever, nearly triple 2023’s total and 12 times the early-2000s annual average. Floods, hailstorms, wildfires and extreme rainfall drove record payouts, with Ontario alone suffering over a billion dollars in flooding damage.
This major increase in catastrophic events has increased annual insurance costs for Canadians. It has also led to a reshaping of how home insurance is priced as insurers absorb larger, more significant losses.
“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,” Ivans stated.
Annual Insurance Costs: 75% Of Insured Canadians Have Seen an Increase in Their Premiums In The Past Two Years
The massive uptick in annual insurance costs has gone largely unnoticed. According to an article from InsuranceBusinessMag, three in four Canadians who are insured have seen their prices rise in the past two years.
Among these increases:
- 46% of Canadians saw hikes of around 5% or less
- 19% of Canadians saw increases of around 10%
- 10% of Canadians saw increases of 15% or more
- 14% of Canadians reported no increases
- 11% of Canadians said they are unsure
Canadians aged 35 or older are more likely to own both a car and a home. This age range has reported that they have experienced an increase in annual insurance costs at a higher rate of 78%. This is compared to those who are between the ages of 18 and 34, who experienced an increase of 64%.
High-risk individuals are also susceptible to premium increases, according to Ivans.
“For some new drivers, or for those with tickets or past claims, car insurance can run from $600 to $800 a month. That puts it in the same category as rent or groceries, or household expenses, and it’s a real strain for many consumers,” he says.
Canadians Are Taking Action To Offset Premium Increases
Due to the rise of annual insurance costs, consumer behaviour is changing. According to the InsuranceBusinessMag article, roughly 63% of Canadians who were insured took steps to lower costs:
- 40% shopped around
- 30% asked for discounts
- 21% changed or removed parts of their coverage
- 3% upgraded their home or vehicle
The financial strain of high annual insurance costs has surfaced in other ways. Auto affordability is also being directly affected at the point of purchase.
Dan Park is the CEO at Clutch Canada, Canada’s largest online used vehicle retailer. He states that high premiums can deter buyers, and in some cases, they may stop deals altogether. This is particularly the case among newer or less experienced buyers.
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“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,” Park stated.
How to Save on Insurance Without Reducing Your Coverage?
According to the survey, one in five Canadians is cutting corners on their coverage to save on annual insurance costs. Unfortunately, doing so may lead to bigger expenses down the road in the event that something goes wrong.
By reducing your coverage, you increase your exposure and can sometimes find yourself spending a lot of money unexpectedly. Instead of cutting coverage, it is highly recommended to do your research by searching for discounts. This can be done for both car and home insurance. By shopping around, comparing quotes, and bundling policies, you can ensure you remain insured while potentially cutting your annual insurance costs. If you are in the market for a new insurance quote, don’t hesitate to reach out to us at isure today!
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