With a dearth of insurance companies, it’s gotten harder and harder for drivers to find affordable car insurance rates in Alberta.
Even though most of us have been driving less due to remote working and stay-at-home orders. auto insurance premiums have increased across the province, and the rest of Canada.
According to the latest Auto Insurance Price Index from LowestRates.ca, insurance premiums in Alberta rose an eye-watering 30 per cent in the fourth quarter of 2020 compared to the same time in 2019. The province had the third-highest premiums after British Columbia and Ontario.
What’s making car insurance so expensive in Alberta?
A number of factors have contributed to Alberta’s high rates, but one that gets a lot of attention is the 5 per cent cap on rate hikes that was introduced by the previous NDP government in 2017.
This drove many insurance companies out of the province, and that lack of competition within the market has resulted in higher car insurance rates for drivers.
Premier Jason Kenney didn’t renew the cap in the summer of 2019 when it expired, which sent insurance prices skyrocketing in order for companies to remain profitable. Some Albertans found themselves having to pay their entire year’s premium up front.
Can the Alberta government balance the car insurance market?
One way the provincial government has attempted to manage auto insurance premiums in the province is by proposing Alberta move to a no-fault insurance model. This proposal is part of Bill 41 — the Insurance (Enhancing Drive Affordability and Care Amendment) Act — which was introduced in October 2020 and came into force in December of that year.
A move to a no-fault model would mean that, after a collision, each driver receives damages from their own insurance company, regardless of who was at fault. This is different from the way Alberta’s insurance market currently operates, which is an at-fault system. Under that model, the insurance company of the driver who is deemed at fault pays for damages, but to get to that determination involves costly legal fees. The proposal suggests that by adopting no-fault insurance, drivers could see a reduction of 9.4 per cent in their premiums.
Another cost-reduction measure being proposed is pay-as-you-drive insurance, which allows you to pay a basic rate for auto insurance that covers you for a certain amount of kilometres driven. If you drive more than that, you pay an additional rate.
Bill 41 also broadens the definition of a “minor injury” to include those that “do not have a permanent negative or life-altering impact for injured individuals.” A cap of $5,296 for “pain and suffering” was also placed on how much a person can claim for a minor injury. This was done with the aim of bringing down bodily injury claims costs and, subsequently, people’s premiums.
“Until very recently, regulations tied to bodily injury claims drove the cost of insurance premiums in Alberta up at an alarming rate,” says Vanessa Barrasa, manager of media relationsfor the Insurance Bureau of Canada. “Changes made by the provincial government to insurance regulations have been put in place to stabilize premiums for Albertans and make rates more affordable.”
Still, the province’s auto insurance regulator, the Automobile Insurance Rate Board (AIRB), recently approved several auto insurance rate changes, which came into effect in the first quarter of 2021. Depending on where drivers have their insurance, they could see an increase or decrease in their premiums. For those living in Calgary, rates dropped 4 per cent, whereas Edmonton rates remained the same and Red Deer residents’ rates increased by 12 per cent.
How to get lower car insurance premiums in Alberta
Even though premiums remain high in certain parts of the province, there’s still hope for Alberta drivers in finding a lower rate. Consider the following when shopping for car insurance:
- Has COVID-19 changed your driving habits? If you have more than one vehicle and no longer use the secondary car, consider selling it. Not only do you eliminate insurance costs; you also get rid of the other associated costs of maintaining a second car.
- Consider switching to usage-based insurance, which uses telematics to monitor your driving habits and can result in discounts for safer driving.
- Choose the right vehicle. Factors like the price, safety record, repair costs and the risk of theft all contribute to your premium. Do your research and find a vehicle that doesn’t top the IBC’s Top 10 Stolen Vehicles list each year, and isn’t super expensive.
- Increase your deductible. By opting to pay more out of pocket after an at-fault claim, you’ll pay lower monthly premiums.
- Consider removing collision coverage on older vehicles, as it might cost less to pay for the repairs yourself on an older vehicle.
- Bundle up. Insurance companies like it when you have multiple policies with them. They incentivize this by offering multiple-policy discounts.
- Compare rates from different companies. There are several car insurance comparison tools online that you can use for free to secure the best rates for your needs. When you shop the market, insurance companies compete for your business. You’ll be surprised at how much you can save.
LowestRates.ca is a free and independent rate comparison website that allows Canadians to compare rates from 75+ providers for various financial products, such as auto and home insurance, mortgages, and credit cards.