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What’s Happening With Car Insurance in Alberta?

Auto Insurance

By Samantha Lemna | July 3, 2019

The car insurance industry has made headlines more than a few times recently. One article warns of the “bumpy road ahead��? for drivers in Alberta. Another explains how companies aren’tbottomless pits of moneyand how this affects insurance rates for consumers.Like these Aviva customers you may have also received a surprise along with your renewal papers – a demand to reapply for coverage pay premiums up front and an increase in your rates. What’s going on with car insurance in Alberta? We’ll address the cause of these issues and what you can do to minimize the impact on yourself.

What Impacts Your Car Insurance Rates

First it’s important to understand what factors affect your car insurance premiums:

  • Your claims and insurance history.
  • Your driving record (tickets and accidents).
  • Your deductible.
  • Your coverage options.
  • The year make and model of the car you drive (for theft risk and repair costs)
  • Value of your vehicle
  • Your location (weather crime rate accident frequency)
  • Your demographics (risk statistics)
  • Your driving habits including where and when you drive (commuting means you’ll pay more for example)

The Alberta Car Insurance Industry in Turmoil

Over the past several years Alberta has seen a rising number of claims and the cost of each individual claim has also gone up especially with those involving minor injuries. Claims are more frequent as accidents are happening more often largely thanks to distracted driving. Vehicles also cost more than ever to repair due to the increasing use of technology more expensive materials and the high price of labour to fix them.

The Government of Alberta limited the payout for minor injury claims which helped reduce certain claim costs. However they also implemented a 5% cumulative premium increase cap and set the price for liability-only car insurance. This meant insurers could not appropriately price their insurance products for the risks.

Update September 2019: This rate cap has been removed which means insurance companies will likely be increasing their rates more than 5%. Talk to your broker if you’re unhappy – we work with a number of different insurance companies and can find you the cheapest car insurance rates in Alberta!

Insurance fraud is also an issue. Aviva Canada claimscar insurance fraud costs Canadiansover $2 billion per year. Insome cases of insurance fraud the insured is an active participant and at other times they are an innocent bystander. Regardless this is a contributing factor to rising rates.

What Insurance Companies Are Doing in Alberta

The number of claims cost of claims government regulations and insurance fraud has all come together to create a crisis for car insurance in Alberta. Insurers are experiencing significant losses which has pushed them to do the following:

  • Reduce payment options
  • Remove discounts
  • Increase prices for optional coverage
  • Cancel brokerages to reduce risks in Alberta
  • Pull out of the province entirely

Why should you care about an insurance company’s profitability especially when your rates are going up? In addition to having a more difficult renewal and application process you’ll also experience fewer payment options . For example you may be required to pay your full premium up front instead of through monthly payments. You may also have fewer coverage options and in the end less consumer choice and competition between insurers.

What can you do?

You will likely still be impacted as a consumer but there are a number of things you can do to keep your rates as low as possible and ensure you’re getting the best coverage for the best price you can.

  • Stay insured as gaps in your insurance history will raise your rates.
  • Don’t hop around insurance companies unless it’s truly worthwhile (the new business discount is transforming into a loyalty discount throughout the industry).
  • Avoid submitting claims for damage you can afford to fix .
  • Be aware of insurance fraud and scams.
  • Pay your insurance on time.
  • Bundle your insurance with one company for discounts.
  • Practice safe driving habits – be courteous know and follow the rules of the road leave adequate following distance and don’t drive distracted!
  • Invest in winter tires for the colder months.
  • Consider using public transit for your commute if possible.
  • Review your insurance coverage with your broker at least annually.
  • Your broker understands what’s going onand how to find the best insurance for your needs and budget. They can advise you on your options if you need to cut costs.

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