Auto Insurance In Alberta: How Much Does It Cost?

Auto insurance in Alberta is mandatory and is provided by private carriers. The average cost of auto insurance in Alberta was $1,587 in 2022, according to the Alberta Automobile Insurance Rate Board. However, rates vary depending on factors such as age, gender, location, driving history, vehicle type, and usage. Alberta has a private auto insurance system with some government-imposed regulations, including a grid rating system that caps the amount insurers can charge for basic coverage. The provincial government has implemented reforms to reduce rates, including a direct compensation system for property damage and a cap on rate increases for drivers with a good record.

Average cost of auto insurance in Alberta

The average cost of auto insurance in Alberta, Canada, is around $1,500 per year, or about $132 per month. However, this figure varies depending on several factors, and rates are rising.

According to the Automobile Insurance Rate Board (AIRB), the average approved rate change for the year up to March 31, 2024, was 1.90%. The average annual premium in 2022 was $1,587, a slight increase from 2021's figure of $1,578.

The cost of auto insurance in Alberta is dependent on several factors, including age, gender, location, driving history, vehicle type, and driving activity. For example, younger drivers are considered higher risk and tend to pay more for insurance, while insurance rates for older drivers may increase due to statistical risks associated with driving in elderly years.

Additionally, urban areas with heavy traffic or high crime rates typically have higher insurance costs than rural or suburban areas. The type of vehicle also matters, as more expensive vehicles or those with higher repair or replacement costs will lead to higher insurance premiums.

Other factors that influence insurance rates in Alberta include the number of years a person has had their driver's license, traffic convictions, accidents, claims, and gaps in insurance history.

To find cheaper auto insurance in Alberta, it is recommended to compare quotes from different providers, as rates can vary significantly between companies. Bundling insurance policies, such as home and auto insurance, can also lead to cost savings.

How auto insurance in Alberta works

Auto insurance in Alberta is provided by private carriers and is mandatory for all drivers. The provincial government regulates the industry, with rates overseen by the Automobile Insurance Rate Board (AIRB) and the Office of the Superintendent of Insurance.

The average cost of auto insurance in Alberta was $1,587 in 2022, according to the Alberta Automobile Insurance Rate Board. However, rates vary depending on several factors, including age, gender, location, driving history, vehicle type, and coverage type.

Alberta has a unique grid rating system that caps the amount insurers can charge for basic coverage. This system takes into account factors such as experience, driving record, driving school certification, and age. The lower a driver is on the grid, the less they will pay for their insurance.

In addition to the mandatory minimum coverage, drivers can also purchase optional coverage, such as comprehensive insurance, collision insurance, and specified perils protection.

To get the best rate on auto insurance in Alberta, it is recommended to shop around and compare quotes from multiple insurance companies. Other ways to save on auto insurance include bundling policies, insuring multiple vehicles, choosing a higher deductible, and maintaining a clean driving record.

Mandatory types of car insurance in Alberta

In Alberta, it is mandatory for drivers to have three areas of auto coverage: third-party liability insurance, accident benefits insurance, and direct compensation property damage. Driving without these coverages can result in heavy fines and the suspension of your license.

Third-Party Liability Insurance

Third-party liability insurance provides financial protection if you injure another person or damage their property. It also helps cover your legal expenses if you’re sued after an accident. The Government of Alberta requires a minimum limit of $200,000 in third-party liability insurance, but it is recommended to have $2,000,0000 of coverage.

Accident Benefits Insurance

Accident benefits insurance provides financial protection if you’re injured in a collision, regardless of who is at fault. Coverages can include your medical and rehabilitation expenses, income replacement if you’re unable to work due to your injuries, funeral expenses if you pass away, and compensation for your surviving family members.

Direct Compensation Property Damage

The Government of Alberta introduced mandatory direct compensation property damage (DCPD) on January 1, 2022. DCPD covers the costs to repair or replace your vehicle and its contents if you’re involved in a collision that another driver is responsible for—either fully or partially. If you’re partially at fault for the collision, DCPD will partially cover the costs, and you will have to pay the remaining balance out of pocket unless you have collision coverage. If you’re fully at fault, DCPD will not cover the costs, and you will need collision coverage.

Optional types of car insurance in Alberta

While basic automobile insurance is required by law in Alberta, there are several types of optional car insurance that drivers can choose to add to their policies. Here are some of the most common optional coverages:

• Comprehensive Insurance: This type of insurance covers damages to your vehicle that are not the result of a collision. It includes protection against instances such as fire, theft, vandalism, and environmental or weather-related damage. As the name suggests, comprehensive insurance offers the most extensive coverage of any auto insurance policy.
• Collision Insurance: Collision coverage pays for repairs or replacement of the policyholder's vehicle in the event of damage caused by a collision with another vehicle or object, regardless of who is at fault.
• Specified Perils Coverage: This type of insurance is a step up from collision insurance but not as comprehensive. It covers damages caused by specific perils named in the policy that are not the result of a collision, such as fire or theft. Any damage caused by a peril not named in the policy will not be covered.
• All Perils Coverage: This coverage combines comprehensive and collision insurance, providing protection against a wide range of risks, including theft.
• Emergency Roadside Assistance: This optional coverage ensures that you can get assistance if you have car trouble, such as a flat tire or a dead battery.

In addition to these standard types of optional insurance, drivers in Alberta can also add what are known as Standard Endorsement Forms (SEF) to their policies. Here are some examples of SEFs:

• SEF 19A - Valued Automobile(s): This endorsement is designed for classic vehicles when the depreciated value is significantly lower than the vehicle's actual worth.
• SEF 20 - Loss of Use: This endorsement provides reimbursement for alternative transportation, such as taxis, Ubers, or rental cars, while your vehicle is being repaired.
• SEF 27 - Legal Liability for Damage to Non-Owned Automobile: This endorsement extends your policy to cover vehicles you don't own, such as rental cars.
• SEF 39 - Accident Rating Waiver: With this endorsement, your insurance rates won't increase after your first at-fault collision.
• SEF 43 - Limited Waiver of Depreciation: This endorsement waives the depreciation on the replacement or repair of a new vehicle if it is damaged by an insured peril.
• SEF 44 - Family Protection: This endorsement provides protection if you and your family are injured in an accident caused by an underinsured or uninsured driver. It will cover any costs that exceed the other driver's insurance benefits.

Factors that impact your Alberta car insurance quote

Several factors influence your Alberta car insurance quote. Here are some of the key considerations:

• Age: Younger drivers are often considered higher-risk by insurers due to their lack of experience, resulting in more expensive rates. As you get older, your rates tend to decrease, assuming you maintain a clean driving record.
• Gender: Males typically face higher insurance quotes due to statistical trends indicating a higher likelihood of claims.
• Driving record: A clean driving history signals to insurers that you are less prone to accidents, resulting in lower premiums.
• Licence class: Less experienced drivers with a Class 5-GDL licence tend to face higher rates compared to fully licensed drivers.
• Vehicle type: More expensive vehicles generally incur higher insurance costs due to increased repair or replacement expenses. However, certain SUVs and minivans may cost less to insure due to their association with family use and safer driving habits.
• Location: Living in urban areas with heavy traffic or high crime rates can result in higher insurance expenses compared to rural or suburban areas.
• Storage: Keeping your car in a private garage when not in use can lower insurance costs compared to street parking.
• Driving activity: Increased mileage raises the likelihood of accidents and subsequently leads to higher insurance quotes.
• Type of vehicle: The make, model, and year of your vehicle are considered when determining your quote. Factors such as the value, safety features, and repair costs are taken into account.
• Driving history: Your driving record, including the number of years licensed, speeding tickets, accidents, and claims, is reviewed to assess your risk as a driver.
• Area of residence: Your location within the province can impact your insurance rate. Living in larger cities like Edmonton or Calgary, which have higher rates of theft and collisions, can result in higher premiums.
• Number of drivers: Adding multiple drivers to your policy will increase your payments.
• Usage: How you use your vehicle, such as for business or pleasure, can affect your insurance rate. Commuting long distances daily or using your car for business purposes may result in higher premiums.

Frequently asked questions