Understanding the New Tariffs
As Canada and its trading partners adjust economic policies, new tariffs are being introduced on various goods and materials. These tariffs, which affect industries such as automotive, construction, and consumer goods, are expected to lead to price increases across the board. Policyholders should be aware of how these economic shifts could influence the cost of their insurance coverage.
How Tariffs Could Affect Insurance in Ontario
Tariffs can have a cascading effect on insurance in multiple ways, from increased claims costs to changes in premium pricing. Below are some key areas where tariffs could have an impact:
Auto Insurance
Ontario drivers may see increased auto insurance costs due to:
Higher vehicle repair costs: Many car parts are imported, and tariffs on these components will drive up repair expenses. Insurers, in turn, may raise premiums to cover these added costs.
Increased vehicle replacement costs: If tariffs lead to higher prices on new and used vehicles, insurers may need to adjust payouts for total loss claims, potentially increasing policy premiums.
Home Insurance
Rising construction costs: Tariffs on steel, lumber, and other building materials will impact the cost of home repairs and rebuilding. As claims become more expensive, insurers may need to increase home insurance rates to compensate.
Delays in repairs: Supply chain disruptions from tariffs could lead to longer repair timelines, affecting claims processing and temporary housing coverage.
Commercial Insurance
Business property insurance: Increased costs for machinery, office equipment, and commercial property replacements may result in higher insured values and, consequently, higher premiums.
Business interruption insurance: Companies reliant on imported goods may experience operational disruptions due to tariff-induced supply chain delays, potentially leading to higher business interruption claims.
Life and Health Insurance
Inflation-driven premium adjustments: If tariffs contribute to overall inflation, the cost of living will rise, which may affect insurance premium rates in the long term.
Changes in healthcare costs: If medical supplies and pharmaceuticals become more expensive due to tariffs, insurers may reassess their pricing for health-related policies.
What Policyholders Can Do to Protect Themselves
To mitigate the potential effects of rising insurance costs, consider the following strategies:
Review Your Policy: Ensure your coverage is adequate for potential increased replacement costs. If home values or repair costs rise, underinsured properties may be at risk.
Lock in Premiums: If your insurer offers multi-year policies or renewal guarantees, consider securing your rate before premium increases take effect.
Bundle Policies: Many insurers offer discounts for bundling home, auto, and business policies. This could help offset premium increases.
Explore Inflation Protection Riders: Some policies allow for automatic adjustments to keep up with rising costs.
For Business Owners – Consider Supply Chain Coverage: If your company relies on imported materials, adding supply chain insurance may help mitigate losses due to delayed shipments.
What’s Next?
As insurers assess the long-term impact of tariffs on claims and coverage costs, Ontario residents should stay informed about potential changes to their policies. Speaking with a trusted insurance advisor can help individuals and business owners make necessary adjustments to their coverage before costs rise further.
If you have questions about your policy, or would like to review your options, contact Chazz Financial today. Our team can help you navigate these changes and ensure you have the right coverage to protect your assets and business interests.