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The rising costs of car ownership
The North American automotive landscape is undergoing significant changes due to the imposition of tariffs by the U.S. government. While many may think that only new car buyers will feel the financial strain, existing car owners are also facing increased costs.
The Canadian Chamber of Commerce has reported that the combination of auto tariffs and tariffs on steel and aluminum will lead to higher insurance premiums and repair costs for drivers in both Canada and the United States.
As car prices rise due to these tariffs, the costs associated with repairs are also expected to increase.
This is particularly concerning for those who rely on their vehicles for daily transportation. The report from the chamber’s Business Development Lab indicates that repairable claims costs could rise by 1% to 2%, which will inevitably be passed on to consumers in the form of higher insurance premiums when policies are renewed.
Insurance premiums on the rise
Insurance expert Daniel Ivans highlights that while liability coverage may remain stable, the portion of insurance premiums that covers physical damage to vehicles is likely to see a significant increase. This includes costs related to collisions, theft, and vandalism.
With tariffs driving up the prices of repair parts, consumers can expect to see their premiums rise by an estimated 3% to 8% as a direct result of these tariffs.
Glen Hodgson, a senior fellow at the CD Howe Institute, suggests that the increases could be even steeper, potentially reaching 5% to 10%.
This is particularly alarming for car owners who may already be struggling with the financial burden of vehicle ownership. The cascading effects of tariffs on the automotive industry are becoming increasingly apparent, and consumers need to be prepared for the financial implications.
Strategies for navigating increased costs
As repair costs rise alongside insurance premiums, car owners may find themselves in a difficult position. Ivans advises consumers to shop around for insurance rates, especially in regions like Ontario where insurance is privatized. With numerous companies competing for business, it’s crucial for consumers to explore their options and find the best coverage for their unique needs.
Additionally, as the cost of parts increases, car owners may also face higher repair bills at their local mechanics. It’s essential to stay informed about the potential for increased labor costs as well, as mechanics may seek higher wages to keep up with the rising cost of living. By being proactive and researching insurance options, consumers can mitigate some of the financial impacts of these tariffs.
