Alberta is growing by leaps and bounds, with the economic growth in the area enabling and enticing more people to move to this beautiful area. Although it is a prairie province, Alberta has her fair share of metropolitan areas. The land is rich and varied, as are her people. Buying car insurance in Wild Rose Country can be expensive if you aren’t sure how to manage, but it is by far not the most expensive in Canada (Ontario is). By learning about how car insurance works in Alberta, you can make sure that your vehicle is protected and that you’ve received the best rates possible.
As with many areas of the country, Alberta requires its residents to have minimum insurance coverage for their vehicles. Drivers can always choose to purchase more coverage than the minimums, but driving without even the minimum coverage can result in fines and other consequences. These coverage requirements fit into several specific categories:
- Liability for bodily injury
- Property damage liability
- Medical payments
- Death benefits
- Disability benefits
Property and Medical Coverage – Alberta vehicle insurance laws require that drivers have a minimum of $200,000 liability coverage for both bodily injury and property damage. This amount covers the driver on a per accident basis. The law also requires at least $50,000 of coverage for medical payments. This is for each injured person, rather than the entire accident. Additional benefits are also available. Chiropractic care is covered up to $750, while massage therapy and acupuncture are each covered up to $250. All of these benefits may not be necessary at the same time, but they are handy to have if you are unfortunate enough to be in an accident.
Death Benefits – If someone dies in an automobile accident, the minimum allowed for the funeral is $5,000. Survivors are also entitled to death benefits resulting from the accident. For the head of household, the death benefits are $10,000 for the first dependent, and an additional $2,000 for each additional survivor. Death of a partner or a spouse is $15,000, with an additional $4,000 for each additional dependent. If a minor child were to pass away as a result of an auto accident, the benefits range from $1,000 to $3,000. Each surviving family member is also entitled to grief counseling, with a minimum payment of $400 toward that assistance.
Disability Benefits – Disability benefits are an applicable part of your insurance policy if someone involved in an accident is disabled as a result. The minimum coverage required in Alberta provides for up to 80 percent of the person’s wages, which tops out at a total of $400 per week. This benefit is payable for up to 104 weeks. If the disabled individual is unemployed, they can receive benefits for up to 26 weeks at an amount up to $135 per week.
Consequences for Driving without Insurance – Drivers who do not maintain their insurance coverage face quite a few consequences. If an officer pulls you over and discovers your lack of coverage, or if you are in an accident, you face fines in Alberta of up to $2875. You may also face additional fines or consequences, such as potential mandatory jail time, particularly if you are a habitual offender of this law. All of this contributes to a vicious cycle, because your insurance rates increase due to the implied risk involved in the hit to your driving record. In the end, maintaining insurance coverage is far less expensive and keeps your driving record clear.
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Auto Insurance Rates in Alberta
According to the Fraser Institute, Albertans pay 2.7 percent of their annual income on auto insurance premiums. Compared to other parts of the country, this falls approximately in the middle range. These premiums can be higher or lower, depending on the calculations made by the prospective insurance provider.
Where Does Your Premium Dollar Go?
One of the reasons that rates for car insurance, Alberta providers included, became so expensive is that it is part of a private system of insurance. This means that companies are not completely regulated by the government in terms of pricing. Private companies work within a framework, in which they set up their own coverage amounts available and rates for that coverage. Private companies have far more leverage to determine their own rates, particularly when it comes to individual driver factors. Provinces with a public system also saw increases in their premiums, but at a lower rate.
In 2004, the Government of Alberta put a set of reforms into effect that delineated maximum rates that providers could charge their clients. This included rates for basic coverage as well as caps for minor injuries. The new regulations were not intended to raise costs for the insurance providers, but instead to find a happy medium for both providers and customers. Since then, other changes have helped to make insurance more affordable for all drivers. The system as it functions now is a delicate balance between coverage that drivers are able to afford and profits that the companies are willing to accept.
Below is a table showing change in Alberta Insurance Rates over the past years. As you can see it has had its ups and downs but basic coverage has gone up significantly in the past two years.
|Change in Basic Coverage||-4%||-3%||0%||5%||-5%||-5%||0%||5%||5%|
|Change in Additonal Coverage||0%||-3%||0%||2%||8%||0%||-1%||-1%||0%|
How Insurance Companies Calculate Your Rates
Sometimes an insurance provider can give you a scary quote for your yearly Alberta auto insurance rates. It’s natural to wonder just how these companies arrive at these rates, particularly since the calculations can seem random at times. There is almost nothing random about the algorithms that insurance companies use. Quite a few factors go into calculating an individual’s premium rates:
- Vehicle type and size
- Vehicle’s purpose
- Driving records
- Credit history
- Factors are not at all under your control
Location – Where you live, work, and drive has quite a bit to do with how much you will pay for your Alberta auto insurance. Living and working in larger metropolitan areas is often more expensive than living in more rural locations, primarily because the risk of loss is greater in a larger area. Smaller, less populated areas are less likely to involve accidents or other risks, such as collisions. Often, you aren’t able to choose your residence specifically to lower your car insurance premiums, but if that is within your control, it pays to seek out a less populated area.
Vehicle Information – When you apply for car insurance, Alberta insurance providers often ask detailed information about your vehicle. They usually require the year, make, and model, and they may ask for information about included safety devices such as airbags and antilock brakes. Some vehicles fare better in collisions than others, and newer vehicles are more expensive for them to replace if you are in an accident. The provider may also ask what safety features you change or augment during inclement weather, such as utilizing winter tires each year. Each of these details factors into how expensive your car will be to insure.
Vehicle’s Purpose – Besides the detailed information about your car itself, your insurance provider frequently wants to know how your vehicle is used. You may see questions like:
- How far do you drive your car?
- Do you use your car for business, school, or commuting?
- How many miles per month do you drive your car?
- How many miles one way is your commute?
Each of these questions lets the provider know the purpose of your vehicle. If you’re in your car driving for most of the day to and from client appointments, you are at a greater likelihood of having an accident. This represents greater risk to the insurance provider. On the other hand, if you drive five miles one way to work, you are less likely to file a claim.
Driving Record – One of the largest factors in determining your premiums when applying for auto insurance in Alberta is your driving record. If you have been driving for twenty years with not a single accident claim during that time, you are considered a lower risk driver. Drivers who have a history of accidents or of moving violations are a much greater risk for the insurance company, and as such their premiums will be far higher. In time, demerit points may fall off your driving record, but you still may have to answer to the insurance company to explain your driving record.
Credit History – Your credit history is very important to Alberta automobile insurance providers. Because of that fact, your creditworthiness is also a large factor in calculating your premiums. The majority of insured drivers who lose their insurance coverage do so because they failed to pay their premiums. Your credit score gives the insurance company an indicator of whether or not you are likely to avoid paying your premium. Applicants with a lower credit score often find themselves the recipients of higher premiums than average. Occasionally, companies may temper this consideration after a period of good payment activity with the company.
Demographics – Another important factor in determining your auto insurance in Alberta is your personal demographic information. Age, gender, marital status, profession, and education status all fit into this category. Older drivers are considered more mature, and married drivers, particularly those with children, are also considered a safer risk. This category is a bit more difficult for drivers to understand, since there really is no cut and dry answer as to which factors are going to cost you more in premium amounts. Each company has slightly different preferences when it comes to acceptable risk levels.
Other Factors – While much of the previous categories include factors that drivers can do something about, there are other factors influencing insurance premiums that are completely uncontrollable. These include things such as changing government regulations and laws, tax changes, large-scale events, and other situations. All of these considerations go into the base rates that insurance companies must charge all of their clients in order to remain profitable.
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What Can You Do to Lower Your Alberta Auto Insurance Rates?
Much about your Alberta car insurance premiums is truly out of your hands, but there are steps you can take to lower your rates. Some of these steps may offer immediate savings, while others may take time in order to show you the full benefit. Choosing as many of the following options as possible can help you to save quite a bit on your annual premiums.
Take a Safety Class – Many drivers took some sort of driver education class when they began driving, but those lessons can be far in your rearview mirror. Drivers who want to save on their insurance can look into taking an updated safety class. Providers often offer discounts once drivers submit proof of satisfactory conclusion of these courses, so it’s worth it to look into taking one. Some classes may take only an afternoon, while others might necessitate attending several times. If you have a poor driving record, taking a safety class can help to offset that mark against your record.
Bundle Your Policies – If you have more than one vehicle or more than one type of policy, such as life insurance or home insurance, it can pay to buy those policies from the same insurance provider. Companies often offer discounts when customers buy multiple types of policies. Discounts can be as large as fifteen percent off the total premium amount, which can add up quickly if your premiums are very expensive. The other benefit to bundling your policies is that you only have to deal with one insurance company, which lessens the possibility of an invoice falling through the cracks and resulting in one or more policies being terminated.
Pay Your Premiums in a Timely Manner – Whether you are a credit risk or not for your Alberta insurance provider, paying your premium installments regularly and in a timely manner can improve your standing with the company. Not all companies offer discounts for prompt payment, but it’s worth it to ask. Some companies offer discounts for paying the entire premium amount in one lump sum. It’s important to note that regularly paying late or not paying at all can cause your rates to go up or can cause the provider to cancel your insurance.
Look for Professional or Group Discounts – If you are a member of specific groups or organizations, either professional or private, you may be entitled to certain discounts. Often drivers forget to ask about these sorts of discounts, but they can add up to quite a savings. Sometimes even your employer may have an agreement with specific insurance providers, so it can be worth the effort to check with the insurance company at the time you apply.
Show Provider Loyalty – Hopping from provider to provider tends to make insurance companies nervous when they consider applicants. Showing loyalty to a provider for a period of years can still get customers some benefits (but not always). Often establishing a positive track record can even overcome negatives such as poor credit score or a bad driving record. Once the company has a positive history with you to look at, they can factor that into the calculations of your quote.
Shop Around – While it’s sometimes tempting to take the first quote that is offered to you, you should obtain quotes from multiple insurance companies. Shopping for car insurance in Alberta is often not enjoyable, but since each company uses slightly different algorithms to calculate their rates, you may find a better deal at one insurance company than you would at another. By spending just a little bit more time, you can double check that you’re getting the right deal for you and for your vehicle.
Ask for a Discount – For some drivers, none of the above options are truly available or they may not offer substantial savings. Sometimes carriers and agents in Alberta may have additional leeway when it comes to Alberta car insurance. When all else fails, ask outright if you’re getting the very best rate that you possibly could or if there is another discount that might be available. Agents are often willing to work to gain your business, particularly if they know that you plan to talk to several providers. Competition is sometimes a good thing.
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Talk to Your Provider
Even after you are successfully the owner of car insurance in Alberta, it’s beneficial to talk to your provider whenever changes occur. Working from home rather than at your office can net you a discount, as can changing vehicles to one that is less risky, and therefore less expensive, to insure. If you move, change your marital status, or welcome a child, these can all prove a benefit.
Something else that drivers tend to forget is that the insurance company works for you. If you find them intimidating or overbearing, you may do well to find yourself a different provider. Your insurance agent should want to keep your business, particularly since you’re doing everything that you can to make sure that you are a model customer. Don’t be afraid to let them know that their service is not meeting your needs if that is true. In the end, even though insurance is a requirement in order to drive legally, you are entitled to fair treatment, decent coverage, and affordable rates.