Understanding Alberta's Auto Insurance Grid Level System

If you're looking to insure your car in Alberta, it's important to understand the grid level system. This system was introduced in 2004 to set a maximum price limit on insurance premium rates. The grid level is the benchmark for insurers when setting their premiums, and it ensures that insurance companies can only charge up to a specified and set maximum. This maximum premium rate is important for drivers to be aware of, as it can help them secure the best price for their coverage needs.

How grid rates are determined

Grid rates are a government-regulated maximum price that insurance companies can charge for basic insurance in Alberta. This only applies to third-party liability insurance, which is the minimum level of insurance required to drive in Alberta.

When a person becomes a licensed driver in Alberta, they start out at a grid rate of zero, provided they didn't have any at-fault claims when they had a learner's permit. At-fault accidents, where there is property damage or bodily injury, will result in a driver's grid rate increasing by five. Every year that a driver goes without an accident, their grid rate goes down by one. The longer a driver goes without an accident, the lower the price of their insurance will be.

The best auto insurance grid rate is -15, which requires a driver to be accident-free for 15 years or more. Conversely, the worst grid rate is +15, indicating a minimum of three at-fault accidents. These drivers will have the highest rates.

New and less experienced drivers with driver training start at 10% below the base rate, or entry-level premium (Grid step -2). Their rate can also decrease as they gain experience and drive without claims or convictions. Each year without an at-fault claim in third-party liability coverage, the driver receives a further 5% reduction to a maximum of 60% reduction to the base premium (Grid step 0). Each at-fault claim moves the driver 5 steps up the grid.

The benefits of driver's training

In Alberta, grid rates refer to the government-regulated maximum price that insurance companies can charge for basic insurance. This only applies to third-party liability insurance, which is the minimum level of insurance required to drive in Alberta. Grid rates are determined by a driver's experience, history of accidents, and driving convictions.

Now, let's discuss the benefits of driver's training, which can be especially advantageous for new and young drivers.

The Benefits of Drivers Training

Driver's training is highly beneficial for new and experienced drivers alike. Here are some key advantages:

Improved Safety:

Driver's training provides a solid foundation of driving skills and techniques, enabling individuals to adapt to various road and weather conditions. It teaches defensive driving, collision avoidance, and how to navigate challenging situations. This training enhances the safety of the driver, their passengers, and other road users.

Confidence Behind the Wheel:

These courses boost confidence in operating a vehicle. They empower individuals to make better decisions, understand vehicle mechanics, and respond effectively in difficult situations. Driving confidently, but not recklessly, is essential for safe driving.

Understanding Rules and Regulations:

Driving schools ensure students are well-versed in the rules of the road and are aware of any regulatory changes. This knowledge helps drivers navigate unfamiliar areas and interpret road signs correctly. Staying updated on regulations is crucial for safe and responsible driving.

Reduced Insurance Rates:

Completing an accredited driver's training program can result in significant savings on auto insurance premiums. Insurance providers often offer discounts to individuals who have undertaken driver's education, especially if they are younger or less experienced. This training demonstrates a commitment to safe driving, which insurers favour.

Practice for the Road Test:

Driving schools provide practical experience and prepare individuals for their road tests. Students learn by doing, gaining familiarity with real-life driving situations. This preparation reduces anxiety and stress associated with the test and enhances overall driving skills.

Developing Good Habits:

Driver's training helps establish good driving habits from the beginning. It reduces the likelihood of developing poor driving habits that could lead to accidents, infractions, and costly tickets. Knowledgeable instructors can guide students towards safe and responsible driving practices.

Education on Drugs, Alcohol, and Responsibility:

Some driver's education courses include demonstrations or discussions about the dangers of drunk driving or driving under the influence of drugs. These sessions can be eye-opening, emphasizing the responsibility associated with operating a vehicle. Understanding the consequences of impaired driving is a vital aspect of driver education.

In summary, driver's training offers a comprehensive approach to learning how to drive safely and effectively. It benefits individuals by improving their skills, knowledge, and overall confidence on the road, leading to safer driving experiences and potential insurance savings.

Exceptions to lowering grid rates

While it is possible to lower your grid rate by one level each year you go without an accident, there are some exceptions to this rule. Firstly, only new drivers can benefit from lowered grid rates through driver's training programs. If you are a new driver and have already had an at-fault accident, you will not be able to lower your grid rate through training. Additionally, if you already have an at-fault claim, driver's training will not lower your grid rate.

Furthermore, specific circumstances allow insurance companies to charge the grid rate rather than a potentially lower rate. These include:

• Having three or more at-fault claims during the past six years.
• Having a combination of five or more minor or major convictions in the past three years.
• Having one or more criminal code convictions in the past three years.
• Having two or more major convictions in the past three years.
• Being convicted of one or more offences of fraud relating to auto insurance in the past ten years.

Other factors that affect insurance premiums

In Alberta, grid rates are a government-regulated maximum price that insurance companies can charge for basic insurance, which includes third-party liability, accident benefits, and direct compensation for property damage (DCPD). The grid rate for a driver is determined by their driving and insurance history, with less experienced drivers often starting at a higher rate.

• Location: Living in a major city like Edmonton or Calgary indicates a higher likelihood of collisions, resulting in higher auto insurance premiums.
• Liability Coverage: The amount of liability coverage you choose affects your premium. While the legal minimum for liability insurance in Alberta is $200,000, most insurance companies require a minimum of $1 million in coverage. The higher the coverage amount, the higher the premium.
• Driving Record: A good driving record with no at-fault accidents, criminal code traffic convictions, or major traffic convictions in the past several years will result in lower premiums. Conversely, a poor driving record will increase your premium.
• Insurance and Claims History: Insurance companies favour clients who have been consistently insured for longer periods and have a history of timely payments. Additionally, the number of claims you've made impacts your premium; the fewer claims, the lower the premium.
• Credit Rating: Providing permission to check your credit rating can result in a discount on your premium, as it serves as proof of timely bill payments.
• Natural Disasters: The frequency and severity of natural disasters such as floods, tornados, wildfires, and hail storms in your area can affect your premium. If you live in an area prone to these events, you may have higher premiums due to the increased likelihood of making a claim.
• Crime Rate: The crime rate of your neighbourhood can impact your premium, as it influences the likelihood of making a claim or being a victim of theft. Higher crime areas tend to have higher insurance premiums.

How to calculate the Alberta premium

The Automobile Insurance Rate Board (AIRB) in Alberta uses a Grid Rating system to determine auto insurance premiums. The system sets premiums based on a combination of factors, including the driver's location, age, gender, driving experience, driving record, and the type of vehicle they drive.

Step 1: Determine Your Grid Level

The AIRB assigns each driver to one of five grid levels based on their risk level. Grid level 1 represents the lowest risk, while grid level 5 represents the highest risk. To determine your grid level, consider the following factors:

• Driving record: The number of demerit points on your driving record and any at-fault accidents will impact your grid level.
• Age and gender: Statistical data shows that men have a higher incidence of road accidents and are more likely to receive driving citations than women. As a result, insurers may consider age and gender when determining premiums.
• Driving experience: The number of years you have held a driver's license will affect your grid level.

Step 2: Calculate the Base Premium

Once you have determined your grid level, you can calculate the base premium for your insurance policy. The base premium is the starting point for your insurance cost and will vary depending on your grid level. The higher the grid level, the higher the base premium.

Step 3: Adjust for Other Factors

After determining the base premium, you can adjust it based on other factors, including:

• Vehicle type: The make, model, and year of your vehicle will impact your premium. Insurance companies consider the potential repair or replacement costs when determining premiums.
• Postal code: Urban drivers typically pay higher premiums than rural drivers due to factors such as crime rates and accident claims.
• Driving distance: If you have a long daily commute, your premium may be higher. Insurance companies may offer commuter coverage for those who travel long distances regularly.
• Insurance history: Your insurance history, including any cancellations, suspensions, or claims, will be considered when calculating your premium.

Step 4: Apply for Discounts

You may be eligible for discounts that can lower your premium. Some common discounts include:

• Bundling car and home insurance: Combining your car and home insurance policies with the same company can often result in a discount.
• Using a telematics device: Telematics devices monitor your driving habits and can lead to lower premiums if you demonstrate safe driving behaviours.
• Memberships: Memberships with certain organizations, such as the AMA, can sometimes result in additional discounts.

Step 5: Compare Quotes

Finally, it is essential to compare quotes from multiple insurance providers in Alberta. Each company will offer different rates, and by comparing them, you can ensure you are getting the best value for your needs.

Frequently asked questions