Repair times for vehicles are down – but insurance rates are still rising 

Since the pandemic, a huge hurdle for auto insurers has been lengthy repair times and inflated repair costs. According to the J.D. Power 2024 U.S. Auto Claims Satisfaction Study, average repair times have decreased in American garages, dropping from 23.9 to 18.9.

Repair times impact auto insurance rates in the U.S. and Canada equally. Yet, in Ontario, auto insurance prices are still increasing – up almost 20% from October 2022 to October 2024, according to the FSRA. Why is this happening?

The longer repair times are, the greater our insurance costs are impacted. After all, auto insurance prices are calculated based on many things. Included in this long list of factors is repair times.  

Repair times impact how much an autobody shop will charge. The longer they are, the more expensive they will cause a claim to be.  

When a driver’s car is out of commission for repairs, loss of use coverage may help cover the cost of a replacement vehicle. This coverage can exist as part of your direct compensation-property damage (DC-PD) coverage (protection for when you’re not at-fault in an accident) or as an optional add-on to help with the cost of a replacement vehicle if you are at-fault for an accident.  

The longer it takes to repair your car, the longer you’ll need a replacement. With DC-PD loss of use coverage, there’s no limit to how long you can use your rental – which costs your insurance company considerably more during lengthy repairs. Plus, with loss of use, you’re entitled to a rental that’s like the vehicle you have insured, so if you have a luxury truck and you get a similar replacement truck temporarily that can hike up the cost even more.  

There are two ways to get loss of use coverage. One is through DC-PD coverage. If you haven’t opted out of DC-PD coverage you’ll have loss of use for any not at-fault accidents while your vehicle is being repaired. With DC-PD, there’s no limit on your loss of use coverage.  

Another way you might have loss of use on your policy is through an endorsement called OPCF 20. It offers additional protection which will cover the costs of alternative transportation while your vehicle is out for repairs. Here are some things to know about loss of use coverage: 

Many people will opt out of OPCF 20 as a way to save money, or because they have multiple vehicles and don’t believe they’ll ever need a replacement. While situations like this are understandable, it can be difficult depending on how many people live at home, what the cars are needed for, and if a disaster happens – say like an ice storm – then all their vehicles could be out of commission for an extended length of time.  

Because adding OPCF 20 offers such considerable protection, it’s generally a highly recommended addition. You never know what might happen – and in fact, most insurance brokers recommend increasing your loss of use limits.  

“If you have the standard limit for loss of use of only $1,500, that likely won’t get you very far in a claim,” said Mitch Insurance claims specialist Jesica Ryzynski. “Especially if you’re driving a high-end vehicle and want to rent something similar while your car is being repaired. We often suggest going with a higher limit of $2,500 or $3,000 depending on the type of car you drive. In some instances, increasing your limit could cost as little as $30 a year and is well worth the extra money.” 

Longer repair times were initially considered to be a repercussion of COVID-19-imposed shutdowns, which caused delays from manufacturers. Because of this, shops couldn’t access parts as quickly, so vehicles would be waiting and repairs took longer to complete. 

Other factors include a shortage of mechanics and an increase in highly complicated vehicles, like EVs, which sometimes required special skills to fix. 

While the pandemic may have trickle-down impacts for years to come, we’re at least starting to see most things go back to normal. This includes auto parts coming in more regularly, which will help shorten repair times.  

Repair times are just one piece of the picture. Other factors, such as auto theft, inflation, weather disasters, and more, are also impacting auto insurance rates. 

Every company has a different way it rates risk, but all these external factors play a role in the cost of claims. And as weather gets more extreme and car theft escalates – well, shorter repair cycles may be more convenient, but they won’t zero out the impact everything else is having. 

“Many people don’t realize how extreme weather is effecting their insurance,” said Ryzynski. “Storms are increasing in frequency and intensity. This causes more extensive damage to cars, leading to higher insurance costs. 

“Storms in 2024 have caused over $8 billion in insured damage, making it Canada’s most expensive year ever for weather. Even if your vehicle wasn’t impacted, these events are still affecting your rates. Insurers need to recoup these costs, which means everyone’s premiums go up.”   

One way to manage your insurance costs is to shop the market. As rates rise, your current provider may not be giving you the best deal. Our team of brokers can help you find affordable insurance easier.  

The J.D. Power 2024 U.S. Auto Claims Satisfaction Study suggested that a focus on communication is crucial to customer satisfaction, such as through clear updates, timely responses, and accessible information. While the study focuses on America, the same applies to Canada as we enter unprecedented times for the insurance industry.  

With costs rising, it could be a considerable balancing act for insurance companies trying to retain loyalty while also managing their pool of payout funds. 

We’re happy to help. As an insurance brokerage, Mitch can give you coverage advice based on your situation and shop the market to get you the best deal. Give us a call and get a free auto insurance quote today.