New 15% Tax on Insurance Premiums
It’s not the kind of news we like to bear. But we feel it’s important for all our valued clients to fully understand the impact the 2016 provincial budget will have on insurance costs for us all. We’ve simplified the main points to make them as clear and informative as possible.
The Insurance Premium Tax
As its name implies, the Insurance Premium Tax is a 15% retail sales tax that will apply, as of July 1st, 2016, to all home, auto, and commercial insurance products sold in the Province. This government tax will be reflected and charged on your policy invoice. Business owners should note that, as a retail tax, the Insurance Premium Tax is not recoverable as per HST Input Tax Credits, under current government regulations.
The Insurance Companies Tax
Currently, all insurance providers pay government a 4% tax on each policy. Although you may not be aware of this tax, it always makes up part of the cost of your insurance premium. As of July 1st, 2016, government has increased this tax from 4% to 5%. Therefore, in addition to the new 15% sales tax, this 1% increase will also be reflected in the cost of all insurance policies, after July 1st.
The 2% HST Increase
The increase in the HST from 13% to 15% will mean that many insurance claims will now be affected by a 2% increase. This is due to the fact that the companies providing car, home, and other repair services, will be subject to this 2% increase – which they will, in turn, pass on to insurance providers. Insurance premiums are determined by the cost of paying out claims. Whether or not insurance premiums subsequently increase to reflect the 2% HST increase, is dependent upon the number and nature of claims filed.
Steers is highly cognizant of the significance of these changes for many of our loyal customers. We share your concern, and our agents are standing by to help you mitigate these circumstances wherever possible. Remember – making small changes such as increasing your deductible, bundling your home and auto insurance, and installing a home security system, can significantly reduce your insurance premiums. Talk with Steers today about these and other ideas for keeping your overall insurance costs down.
The overall impact of these new and increased government taxes will be closely monitored over the upcoming months, by all insurance providers. They will submit their individual findings to the Public Utilities Board, who will ultimately determine the consumer cost impact. Steers takes this opportunity to assure our many clients that we will continue to provide the best possible prices and thank them for trusting in us to provide the rock solid protection for which we’ve always been known. Sign up for our newsletter, here, to receive updated information on the insurance impact of the 2016 provincial budget, as it becomes available.