Auto Insurance

Challenges with Automobile Insurance in Alberta, and 5 Things You Can Do to Help Yourself

If you have had challenges with your auto insurance purchase recently, you are not alone!

Auto insurance providers in Alberta are finding themselves in a tough position recently, with some insurance companies paying out $1.20 in claims & expenses for every $1.00 in premium in 2018.  This is obviously not sustainable in the long term.  

It would seem this is easily solvable – if you are losing money you can either increase income or reduce expenses.  The reality, however, is not so easy –

  • In Alberta, the Provincial government requires insurers to file a request & get permission for every rate increase.  Typically, the government has limited this increase to 5 – 10% – far less than needed.  While on the surface it appears the government is protecting consumers with this action, the reality is that auto insurers have now had to tighten underwriting rules to get to a break-even situation financially.  Some customers may not be able to obtain collision coverage for their vehicle, or may not have the option to pay their premium monthly.  Some insurers are treating a distracted driving conviction as a major conviction, resulting in a surcharge.
  • Claims costs continue to increase –
    • Bodily injury claims in particular are up substantially. 
    • Today’s automobiles have great safety features, but this results in a significant increase in repair costs, even for a fender bender. 
    • Catastrophic losses continue to increase in cost & frequency – the Insurance Bureau of Canada reports the five most expensive losses in Canada have all happened within the past 8 years – at a total cost of $7.1 Billion – and 4 of those 5 occurred in Alberta.  (This affects auto insurance as well as property insurance.)

So, what can you do as an individual to make sure you get the coverage you need when buying auto insurance?  Here are 5 easy tips that will help you –

  1. Explore the cost saving of increased deductibles.  The cost for your insurance company to adjust & settle a small claim is relatively high, so there are often significant savings by increasing the deductible for your collision & comprehensive coverage.
  2. Make decisions that help to obtain & keep a good credit rating.  Insurance companies have discovered a direct relationship between credit score & claims, and offer discounts accordingly. 
  3. Don’t get tickets.  Seems obvious, but convictions for speeding, distracted driving (see above) or other violations impact your premium.  Not to mention the safe, responsible operation of your vehicle is important to everyone.  One of the insurance companies we represent even has an app that will track your driving habits over a period of time.  They offer a discount to sign up, and an opportunity to earn a significant premium saving based on your good driving habits.
  4. Speak with your Insurance Broker to make sure you are receiving the discounts you are entitled to, and that your information on file is up to date.  Previous claims or convictions eventually drop off and will positively impact your premium.  Many insurance companies have multi policy discounts that will help save substantially on costs.
  5. Not using an Insurance Broker currently – it’s time to contact one.  A relationship with an independent insurance broker will pay off in the long run.  Brokers use their knowledge & training to assist you with navigating the world of auto, property & liability insurance so you get the best possible coverage at a price that works for you.

Hopefully the challenges in the auto insurance world get resolved soon.  However, it is likely that premiums will increase moving forward.  Understanding the market conditions and your own situation will help you in your quest for the coverage you need at a fair price.