Understanding Alberta’s Auto Insurance Reform
The Background: Why Reform Was Needed
Alberta’s auto insurance system has faced rising claims costs from increased lawsuits and healthcare expenses, catastrophic weather events driving up premiums, and market instability leading insurers to tighten coverage and raise rates.
What’s Changing? Key Reforms
- Care First Model (No-Fault Insurance): Starting January 2027, drivers will be compensated through their own policies for injuries. Lawsuits for pain and suffering will be limited, with exceptions for criminal convictions or significant economic losses.
- Rate Cap Adjustments: Effective January 2025, the “good driver” rate cap will rise to 7.5%, replacing the previous 3.7% CPI-based cap.
What This Means for You
- Coverage Restrictions: Many insurers are tightening rules for physical damage coverage (e.g., collision and comprehensive), particularly for drivers with past at-fault claims or multiple convictions. Replacement cost endorsements are also being removed, which may impact claim payouts.
- Higher Premiums: Rate caps are increasing, and coverage options may become
more limited. - Reduced Legal Recourse: The Care First Model limits the ability to sue, making comprehensive coverage even more critical.
- Plan Ahead: To ensure the best options for your needs, shop for quotes early. Securing coverage can take up to 10 business days, especially for renewals or new purchases.
Do You Qualify as a “Good Driver”?
Good Driver Criteria:
- No at-fault accidents in the past six years.
- No criminal traffic convictions in the past four years.
- No major traffic convictions in the past three years.
- No more than one minor traffic conviction in the past three years.
Your rate cap protection may change if you:
- Switch insurance companies.
- Move to a higher-risk area.
- Add a new driver with a
poor record. - Purchase or modify a vehicle.
Did You Know?
Distracted driving is classified as a major conviction, affecting your record similarly to impaired driving. Protect your record by avoiding distractions on the road.
Not a “Good Driver”?
If you don’t meet the criteria, your premiums may rise significantly.
How We Can Help
Many of these changes are beyond our control as brokers, but we will do our best to help you navigate the options insurers are providing. While we strive to optimize your risk profile to reflect your circumstances and secure better rates, it’s important to note that we cannot guarantee improved coverage for drivers with poor records. Our goal is to guide you through these challenges and ensure you understand your coverage options.
- Proactive Renewal Reviews: Connect with us early to review your policy and
maximize discounts. - Navigating Coverage Options: While options for drivers with poor records may be limited, we’ll guide you through the choices available and ensure transparency in coverage.
- What You Need to Know: Driving habits matter. Convictions or at-fault accidents can lead to restricted coverage and significantly higher costs.
For information on auto insurance call CMB at 780.424.2727 or click here to get a quote.
Disclaimer: This blog is for informational purposes only. The information provided is not intended to be exhaustive, nor should it be construed as advice regarding coverage. Eligibility for coverage is not guaranteed, and all coverages are limited to the terms and conditions contained in the applicable policy.