The introduction of widespread tariffs on Canadian goods and the retaliatory tariffs on products from the United States could have an impact on home, auto, and business insurance premiums, and add stress to policyholders’ coverage limits.

Reported by Insurance Business on March 6: “Tariffs are likely to increase the cost of vehicles and homes, which will eventually make their way into insurance premium prices,” said Daniel Ivans, insurance expert from RATESDOTCA Group, a Staebler Insurance partner.

How Tariffs affect Home Insurance Premiums

For homeowners, this means that the cost for materials to repair or rebuild after a claim may go up. A 25% tariff could end up translating to thousands of dollars more per house, depending on the level of repairs. Insurers, who base premiums on replacement values, will likely pass these costs onto policyholders over time. In the longer-run, insurers may raise premiums to account for the increased cost of repairing or rebuilding homes after events like fires or storms.

Beyond lumber, retaliatory tariffs on U.S. goods could strain the broader economy, potentially increasing labour and transportation costs and, in turn, further inflating home repair bills. Homeowners who are already facing higher premiums due to climate risks, will be affected again by the introduction of tariffs.

How Tariffs affect Car Insurance Premiums

The U.S.-imposed tariffs on Canadian goods, targeting exports like auto parts, steel, and aluminum – affect the key ingredients in vehicle manufacturing.

Tariffs on Canadian auto parts like engines, transmissions, and chassis components could inflate repair costs and, in turn, insurance premiums. Canada supplies many U.S. auto parts, and a tariff of 25% could increase prices for everything from fenders to fuel pumps.

Insurers charge premiums based on the anticipated cost to fix or replace a vehicle in the event of an accident. If a $1,000 repair bill jumps to $1,250 due to tariffed parts, that increase compounds across hundreds of claims and adds up quickly. Add to that supply chain delays for automotive parts creating longer wait times for repairs, you have longer rental car usages and additional costs that insurers bear. As with property costs, in the longer-run, insurers may raise premiums to account for the increased cost of automobile claims.

How Tariffs affect Business Insurance Premiums

From construction firms to manufacturers, tariffs will increase costs across industries, which insurers must account for.

Commercial property policies cover buildings, machinery, and inventory, with premiums tied to replacement costs. If tariffs spike the price of materials by 25%, rebuilding a warehouse gets pricier. Equipment coverage feels the pinch too – tariffs on machinery parts could delay repairs and/or inflate replacement costs for industrial gear.

Ensure Your Coverage Limits are Adequate

With the rising costs to cover claims, policyholders are urged to review their coverage limits and discuss with their insurance broker.

For example, a building is insured for $1,000,000, but in light of increased reconstruction costs, its total replacement cost might now be $1,250,000. The insurance company will pay out the $1,000,000 but who’s responsible for the extra $250,000?

Repair, replacement, and rebuilding costs have sharply increased in the past and we discussed those effects during a period of high inflation: What You Need to Know About Inflation and Insured Property Values

Today’s ongoing trade war and tariffs on both sides of the border have added more stress to policy limits. Now is the time to review and potentially revise what amount(s) will be paid out if a claim is made.

Next Steps for You

As an insurance broker, Staebler Insurance has access to many insurance company options and can provide you the best coverages at the most sustainable cost. Review and discuss your policy limits with an insurance broker to find a solution for your unique situation.

Ways to save on your insurance premiums:

• Bundling – insure your home and vehicles with the same insurance company to see an immediate savings of 10-20%
• Telematics – the use of smart technology to track your safe driving habits can net savings from between 10-30%
• Group Rate Program – select employers in Ontario are a part of our Group Rate Insurance Program which can save employees between 10-25% of regular retail rates
• Increase your deductible – choosing a higher deductible does lower your premium but in the event of a loss you’re responsible for a higher amount before the claim is paid
• Snow tires – installing snow tires for the winter driving months, and letting your broker know, will help you save 5% on your car insurance

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Staebler Insurance is a general insurance broker specializing in car insurance, home insurance, small business insurance, and commercial insurance. Staebler brokers proudly serve Kitchener, Waterloo, Cambridge, Guelph, Stratford, Listowel, Fergus, Elora, Wellington County, Perth County, Waterloo Region, the Greater Toronto Area, Golden Horseshoe, and the rest of beautiful Ontario. Get a Quote to get started today.