Car repair costs: Why they’re rising & insurance impacts 

Repair costs for vehicles in Canada are increasing. The cost of repairs are one of the many factors that can influence auto insurance rates—so when they go up, your insurance premiums could, too. 

There are a number of reasons why car repair costs are increasing. Let’s explore why they’re impacting your insurance.  

Certain brands of vehicles cost more to repair after an accident, which contributes to higher insurance premiums. Up-scale, rare, or exotic vehicles are often expensive to repair and replacement parts may be in short supply. 

See, because the cost of repairing your vehicle directly affects the amount of a claim payout. If repair costs are high, insurers will increase premiums to offset potential losses—and to ensure they have enough funds in their pool of payout money to continue covering valid claims. 

Which cars cost the most to insure? Usually newer models with advanced technology are pricier due to the higher cost of repairs for these features. However, repair costs are just one of many factors that can influence how much a car costs to insure. Things like theft rates (if the car model/make is on the most stolen list), car safety rating, horsepower, and more also affect your auto insurance premiums.  

Everything’s getting more expensive nowadays, from groceries to gas and even car repair costs.  

In short, here are the reasons why car insurance repair costs are increasing: 

Electric vehicles (EVs) present a lot of benefits, from their minimal maintenance costs, savings on fuel, and environmental friendliness, but their upfront price can be a deterrent. However, as purchase prices come down, yet another challenge arises: claim costs, which can directly influence insurance costs. 

According to Auto Service World, the total write-off rate for EVs was around 7.48% in the first quarter of 2024. This is a figure up 8% from Q4 in 2023 and 30% up from Q3 in 2023. This is important for EV insurance costs because more claims for EVs signals that EVs might be likelier to be involved in accidents, and as a result many insurance providers may rate EVs higher.  

Claims’ cost aside, there are numerous challenges that come with repairing EVs, from the number of mechanical labour hours required to fix EVs and the nature of the skill that is required to do so. This can be reflected in the rate you’ll be charged to insure your EV.  

Like gas-powered vehicles and claim costs, EV claim costs are likely due to a combination of factors. With EVs especially, there’s an increase in the complexity of vehicles being manufactured, improved technology, and less supply for major components to do repairs.  

Issues with rising repair costs that EVs face are very similar to issues faced by gas-powered cars. However, with Canadian mandates to increase sales of passenger vehicles that are either EV or hybrid, repairing/restoring these vehicles may become more commonplace in the next few years and so rates could potentially fall to reflect this.  

When it seems like auto insurance is on a never-ending rise, you might be wondering what you can do to manage your budget. While rising repair costs are out of our control, there are ways you can manage your own rates:

Have more questions about insurance costs? Need help finding an affordable auto insurance policy? Our team of insurance brokers are happy to help. Give us a call and request a free, no-obligation auto insurance quote today.