The numbers are out, and they’re not pretty. Although drivers were prepared to see their auto insurance premiums rise due to the removal of the previous government’s 5% cap on increases last summer, many weren’t prepared for a hike of 20% or more. And those numbers are exactly what CanadianUnderwriter.ca reported at the end of September. They say that, on average, Alberta’s more than three million drivers have seen a 22% hike in their rates since the same time last year. It doesn’t matter who you are … even the very best drivers out there have seen a rise in their premiums.
The reasons for the hike are multi-layered and complicated, but basically it boils down to the fact that insurance companies simply do not feel that they are profitable in Alberta anymore. Part of the reason is indeed the 5% cap, which experts say discouraged companies from operating in the province. Competition decreased, which left consumers with less choice. Less choice often leads to higher costs.
The CanadianUnderwriter.ca also suggests that insurance companies would prefer their customers pay yearly rather than monthly. Clients that refuse to do this find other options, and those options are often more expensive.
This biggest issue for insurance companies, however, are changes made to Alberta’s Minor Injury Regulation (MIR) due to the results of court cases in 2012 and 2015, says AlbertaAutoInsuranceFacts.ca.
Why the MIR is an Issue
The MIR is a cap that limits pain and suffering awards to people who have incurred minor injuries after an automobile accident. In 2004, that amount was determined by the Government of Alberta to be $4,000. Because of inflation, it’s now at $5,296. However, the two aforementioned court cases essentially changed the definition of “minor injuries,” removing some from the list that are actually quite common in other provinces and jurisdictions. Claimants can now sue for amounts far larger than the cap, which has driven the average claims cost due to bodily injury steadily upwards. In 2011, the average settlement was $41,887. By 2019, that number had risen to $74,946.
This “status quo” doesn’t help anyone. Insurance companies are reporting losses of about nine cents on every dollar they earn, and, of course, consumers are also bearing the brunt of higher premiums.
More Reasons Why Auto Insurance Keeps Getting More Expensive
A few additional reasons why auto insurance rates keep rising, according to the Insurance Bureau of Canada include the fact that cars keep getting more and more expensive to fix. Auto technologies that are helpful for safety (such as sensors, back up cameras, and automated everything), are difficult and time-consuming to fix. Even the smallest dent or ding can cost thousands to repair.
Auto theft and insurance fraud also remain big problems. Last year there was one car stolen every six minutes in Canada, and fraud costs the industry millions and millions each year.
In addition, drivers do not seem to be getting the message about distracted driving. The cause of more than 80% of accidents, in 2017/18 18,659 distracted driving offences were recorded in Alberta. A distracted driving ticket is serious business, and could even lead to the termination of your coverage.
Under Alberta law, you could be charged with distracted driving if you do any of the following while behind the wheel:
- Use a handheld cell phone in any way
- Compose emails or text messages; the law applies even if you are stopped at a stop sign or red light
- Use any type of electronic equipment while the vehicle is in motion (including MP3 players, laptop computers, cameras and GPS units, among others)
- Read, write or draw while driving
- Groom oneself while driving (including flossing, fixing hair, applying makeup, etc.)
Ways to Lower Your Auto Insurance Rates
While the industry works to make auto insurance more affordable again in Alberta, you can take some immediate actions to access lower rates.
- Work with an insurance broker to help you shop around. Trained insurance brokers such as those of us at Lane’s are your allies when it comes to obtaining affordable coverage that will fulfill all your needs. We compare and contrast the policies of several different providers in order to find the best fit for you at the lowest cost.
- Increase your deductible. A deductible is what you agree to pay towards a claim filed due to loss or damage, with the most common deductible amount in Alberta being $500. Generally speaking, a higher deductible will allow for lower monthly premiums.
- Take collision coverage off your policy if your car is older. If your vehicle is older and at the point that if you caused any sort of significant damage then the repairs would likely cost more than its value, you may not need collision insurance.
- Carpool or drive less. This is actually a lot easier these days, with many folks still working from home at least part time due to the COVID-19 pandemic. Those who drive less statistically get into fewer accidents, which is why your insurance company will usually ask about your daily commute and total number of kilometres travelled for a year. If you find yourself driving a lot less these days, let your provider know so that they can adjust your premiums accordingly.
- Consider telematics. Usage-based insurance makes it possible to save as much as 25% on your car insurance rates by allowing your insurance company to monitor your driving habits through an app on your phone. They will watch for activities such as fast accelerating and braking to better assess your overall risk as a driver. If you perform well, your insurance rates should go down accordingly.
- Ask about available discounts. Often insurance companies don’t necessarily offer discounts off the top, so always make sure to ask. You may be able to earn a discount through your alma mater, or because of your employment, or because you have bundled your policies.
The very best way to keep your auto insurance premiums low is to be a safe and conscientious driver. Operate your vehicle in a defensive manner and keep your driving record pristine.
Get More from Lane’s Insurance
Lane’s Insurance is a leading Alberta-based brokerage, offering highly competitive rates on auto insurance and all other insurance needs. Because Lane’s is a brokerage, we can cross-compare several policies to allow you access to the best coverage at the lowest rates.
We are pleased to serve homeowners and business owners throughout Alberta. Contact us at:
- Our Calgary office
- Our Edmonton office
- Our Banff office
- Serving the rest of Alberta
