• Wed. Dec 6th, 2023

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Why Albertans should comparison shop during the car insurance rate freeze

The Government of Alberta, together with the Automobile Insurance Rate Board (AIRB) – the provincial regulatory body for automobile insurance rates – recently announced they will not be approving any new auto insurance rate increases for the rest of 2023.

A rate pause will be in effect until December 31, 2023, meaning insurance companies can no longer apply for rate increases. However, previously approved rate increases will apply, which means Alberta drivers will likely still see an increase in their premiums if their insurance company was previously approved for a rate change.

As usual, Albertans can expect to see their premiums increase since their last renewal if there was a change in their risk profile, for instance, if a new traffic violation was added to their driving record or if they changed vehicles.

Auto insurance premiums are the highest in Alberta

Auto insurance premiums in Alberta are some of the highest in the country. According to a recent Ernst & Young (EY) report, a 35-year-old male driver in Edmonton, Alberta would pay $2,754 in yearly insurance premiums. In comparison, the same driver and profile would pay $1,073 in Saskatoon, Saskatchewan, where auto insurance premiums are some of the lowest in the country.

Typically, insurance providers in Alberta would increase rates to account for increased claims cost, higher cost of replacing vehicle parts, and market fluctuations (like inflation). The rate freeze comes as a measure to curtail insurance rates and make auto insurance more affordable to Albertans. The government is also looking at other short-and longer-term plans to balance rates for Albertans. While the move has received criticism from the Insurance Bureau of Canada for not tackling auto insurance affordability, the rate freeze could mean good news for Alberta drivers.

What does the rate freeze mean for drivers in Alberta?

A frozen environment is a great time to compare car insurance rates from multiple providers and ensure that you are getting the lowest rate on your auto insurance.

Daniel Ivans, a RATESDOTCA insurance expert explains that Alberta transitioned from an “at-fault” system of insurance towards a Direct Compensation for Property Damage (DCPD) system only last year, to make the claims process easier for consumers. In the at-fault system, damages caused by the at-fault party are paid for by the insurance company, and you can sue the other driver’s insurance company for a settlement if they’re at fault. Since January 1, 2022, and under the DCPD system, if your vehicle is damaged in a collision, you go through your own insurance company.

While Ontario has been working under the DCPD model for decades, both provinces are now working to understand and adapt to consumer habits. “Alberta insurance markets are easing their way into this system and are preparing to adapt to claiming patterns and consumer habits,” Ivans says.

For consumers, it means that they should anticipate a lot more changes, including rate increases in the future. “As insurance companies explore the best way to adapt to these changes, consumers will want to shop more aggressively than ever before, looking for an insurance provider that has a model that best fits the consumer’s need,” says Ivans.

“In anticipation of any significant rate fluctuations in the future, consumers should shop for the best rate they can find today, and lock that in before any material rate changes are implemented,” he adds.

Other ways to reduce auto insurance premiums

Apart from comparing rates in a competitive marketplace like Alberta, there are other ways to reduce your auto insurance premiums. Ask your insurance company if they have any discounts, like a multi-policy or a bundling discount that can save you up to 15% when combining multiple vehicles and/or your home and auto insurance policies under one insurance provider.

Many insurance companies also offer a discount of up to 30% if you opt for usage-based car insurance and maintain good driving habits.

You could also remove collision coverage if you have an old vehicle or increase the deductible on your insurance premium if you can afford to.

Alternatively, you can reevaluate your coverage requirements. Perhaps, you no longer need to commute long distances or no longer need to list your teenage child as a secondary driver. Making these tweaks to your insurance coverage requirements can all help lower your auto insurance premium.

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