J.D Power’s 2019 Canada Auto Insurance Satisfaction Study released on February 14, 2019, stated that Alberta has seen the largest jump in its average for increases in car insurance rates, coming in at $326. This was, shockingly, even higher than the national average – which has increased by $298! These rising rates can result in a considerable amount of dissatisfaction and confusion among Albertans. It leaves a number of us wondering: why are Alberta auto insurance rates increasing?
The 3 biggest reasons Alberta auto insurance rates are going up are:
- The inflation of the cost of accidents (due to repairs and liability).
- The increase in the frequency of accidents.
- A rise in natural disasters and weather damage.
- The upturn of insurance fraud taking place.
- Vehicle theft is surging.
Inflation in the Costs of Accidents in Alberta
The cost of having an accident in Alberta has been increasing year over year. The 2018 Collision Cost Study Update showed that the direct cost of collisions increased by an average of 25% between 2010 and 2017. This includes the costs of property damage, medical care, emergency services, legal services, travel delay and lost time in the workplace.
The cost of repairs is increasing for several reasons:
- A rise in the cost of materials
- Increasing labour costs
- The presence of more technology on vehicles such as sensors, cameras, et cetera
More and more vehicles are using electronics and upgraded materials. While this is excellent for your safety and daily driving, it becomes more expensive to replace or repair in the event of an accident. Generally, materials and labour costs are also increasing.
There’s the added complication of liability. This covers property damage and bodily injuries. While some medical care may be covered by the provincial health care system and an employer health care plan, there may be additional expenses that you can be held liable for. Your liability insurance could cover these expenses, up to your policy limit. These costs can be high, however, especially if the accident is serious.
In 2019, the Government of Alberta also introduced a limitation on the amount of payment for claims of minor injury known as the “minor injury cap,” which applies to all injuries sustained in accidents that fall under the category of minor soft tissue and minor sprain and strain injuries. With this, they finalized a set price for liability-only auto insurance and introduced a 5% accumulative rate increase limit.
Increasing Frequency of Accidents
Calgary and Edmonton have seen an increase, especially over the last two years. Distracted driving is one of the top contributors to collisions in Alberta. Between 23,000 and 27,000 distracted driving convictions have been made on Alberta’s roads each year between 2014 and 2018. With the inflating costs of accidents, this means insurance companies are paying out more money more frequently.
A Rise in Natural Disasters and Weather Damage
Bad weather causes a huge spike in accidents on the road. Storms can cause flash flooding and low visibility, which can in turn cause collisions. In the winter, it’s even worse as visibility and road conditions can become extremely poor. In April 2019, a spring snowstorm caused nearly 150 incidents on Calgary’s roads.
Natural disasters such as flooding and wildfires have also been prevalent in Alberta over the last decade. Many vehicles are left behind and are damaged or destroyed.
An Increase in Insurance Fraud
Insurance fraud is very common and costs Canadians over $2 billion a year, according to Aviva. Here are some common types of insurance fraud:
- Lying, misrepresentation or failure to notify on an insurance application or claim.
- Fake insurance paperwork such as pink cards.
- Unlicensed insurance representatives “issuing” insurance policies.
- Intentional acts to damage a vehicle.
- Exaggeration of damage or costs such as legal or medical.
Vehicle Theft in Alberta
Alberta is leading Canada in vehicle thefts with over 23,000 cars being stolen each year. While not all drivers carry insurance to reimburse them for vehicle theft, many do and this has left insurers paying out more and more.
Alberta auto insurance rates are increasing?
Taking all this into account, it is no wonder that the Alberta auto insurance industry is raising rates in order to pay out for these claims as well as maintain themselves as a business. There is currently a cap on the amount Alberta auto insurers can raise their rates: 5% total overall. There is also a cap on liability insurance costs.
You may experience the following actions from insurers:
- Eliminating discounts on insurance
- Decreasing payment method options
- Raising comprehensive and collision coverage prices
- Removing their services from the province
- Re-application required for renewals
Unfortunately, many of these factors are out of our control. We can practice safe driving, reduce our time spent behind the wheel, protect against theft, and be informed on insurance fraud… but these issues aren’t about one person. We understand it can be frustrating to see Alberta auto insurance rates increase, especially when you’ve got a clean driving record and are claims-free. Contact your auto insurance broker for more information on what affects your rates and how you can reduce your premiums.