Effective January 1, 2022, the Direct Compensation for Property Damage Regulation will change the way vehicle damages are handled in Alberta.  Why is the Government changing auto insurance in Alberta and how does that impact you, the consumer?

Why is the Government changing auto insurance in Alberta?

Auto insurance premiums continue to escalate in Alberta for a number of reasons including:

• Newer model vehicles involved in a collision cost more to repair because of the sophisticated computer systems. A small bump can easily cost $2,000 just to reset the systems.
• Alberta is now the vehicle theft capital of Canada. Although Alberta represents only 12% of the Canadian population, we represent 27% of all vehicles stolen across Canada.  In 2019 Ontario logged 23,992 stolen vehicles while Alberta came in at 23,535!
• Alberta has more catastrophe claims than any other province in Canada. That includes flood, fire and hail claims.

The Government of Alberta in conjunction with industry realized that streamlining the claims process could save money and help stabilize or even reduce premiums.

How does the Government changing auto insurance impact you, the consumer?

Effective January 1, 2022, if you are involved in an auto collision, you will deal with your own insurance company with respect to your vehicle damages.

• If you are at fault, you must carry collision coverage to recover your losses, subject to your deductible.
• If you are not-at-fault, DCPD will apply and you will still deal with your own insurance company. All insurers must offer a zero deductible option for DCPD.
• If you choose a deductible, this would help reduce your premium, however the deductible will apply to a claim, and you can’t recover the deductible amount from the at-fault driver.
• Fault and/or the degree of fault is now clearly outlined in the Regulation.

How will this affect my claim and my premium?

Because you are now dealing directly with your own insurance company, your damages will be handled more efficiently and without the complications of dealing with the at-fault driver’s insurance company.  It also eliminates the costs involved with subrogation.  That’s where insurance companies have the right to recover the vehicle damage costs from the negligent at-fault driver.

It is estimated that 42% of drivers will see a reduction in their premiums, 15% no change and 43% will see an increase of premium.  These changes will more accurately reflect the cost to repair your vehicle.  Owners of less expensive vehicles that cost less to repair will typically pay less for their insurance. Similarly, owners of more expensive vehicles that cost more to repair may pay more. It’s a fairer system for everyone.

Do you have to do anything with regard to your insurance?

No, as the DCPD legislation is automatically effective January 1, 2022.  One word of advice, however.  If you do not carry collision coverage in your auto insurance contract and you are at-fault for a collision, you will have to deal with your repairs out of your own pocket, just like you do today.
In Alberta, it is the law that you carry a minimum of $200,000 Third Party Liability, Accident Benefits, and soon DCPD coverage.  All other coverage remains optional.  However, it is important that you understand what the optional coverage includes and also what extensions of coverage you may need.  Always speak to your insurance broker to review the options.

Heather Cournoyer, CIB, CIP, is a seasoned insurance professional specializing in serving the
needs of business in Alberta and BC.  She believes that consumers need to understand their
 insurance program so that there are no surprises in the event of an unfortunate unforeseen loss. 
Contact her at heather@thinkinsure.ca or 587-597-5478 for further information.