To address affordability challenges, the Government of Alberta is implementing short-term reforms to assist Alberta drivers.
- What is the good driver protection?
- What is the definition of "good driver"?
- Are there exceptions to the good driver protection?
- What is a "minor" or "major" driving conviction?
- Will my rates go up January 1, 2025?
- Why was the good driver rate cap changed?
- Will rates go up for the next two years?
- How much will bad drivers pay?
- Accident Forgiveness Endorsement (SEF 39)
What is the good driver protection?
To address affordability challenges, the Government of Alberta implemented short-term reforms to assist Alberta drivers.
The short-term reforms include a cap on premium increases for “Good Drivers”. These short term reforms were implemented through a Ministerial Order limiting the Automobile Insurance Rate Board from only approving changes to an insurer’s rating program where no policyholder meeting the definition of “Good Driver” sees an increase greater than what is set forth in the Ministerial Order.
- For 2024 the good driver rate cap was 3.7%.
- For 2025 it is 7.5% (5% good driver rate cap plus 2.5% due to natural disasters).
What this means for Alberta drivers is when your insurance company implements the changes to their rating program, adopting the Good Driver rate cap, if you meet the definition of Good Driver, your premium increase will be capped at 3.7% in 2024 and 7.5% in 2025.
What is the definition of "good driver"?
The Ministerial Order defines a “Good Driver” as a driver who, irrespective of their number of years of driving experience, on the inception date of the renewal of their auto insurance policy, does not have:
- any at-fault claims in the previous six years,
- any criminal code convictions in the previous four years,
- any major convictions in the previous three years, and
- more than one minor conviction in the previous three years.
Are there exceptions to the good driver protection?
There are exceptions to the “Good Driver” rate protection:
- You move from a lower-risk rating territory to a higher-risk rating territory (as defined by your insurer)
- You add a new driver to your policy who has a worse driving record or higher overall risk rating
- You acquire a new vehicle, or modify your existing vehicle
- You change insurance company, or
- You are capped by the grid rating system
What is a "minor" or "major" driving conviction?
Examples of “Major” driving convictions:
- Distracted driving
- Failing to remain at the scene of an accident
- Speeding in a school zone or playground zone
- Exceeding the speed limit by more than 50 kph
- Failing to stop for a school bus.
Examples of “Minor” driving convictions:
- Speeding, but less than 50 kph over the limit
- Following too close
- Failing to stop and/or failing to yield
To find a full list of what traffic offences are considered “major” or “minor,” refer to the Grid Guidance.
Will my rates go up January 1, 2025?
The AIRB will not allow insurance companies to adopt the new 7.5% cap until 12 months after they implemented the 3.7% cap.
This means if you were eligible but didn’t receive the 3.7% cap in 2024 because of your insurance company’s implementation timing, you will receive the 3.7% cap in 2025.
Why was the good driver rate cap changed to no longer tie to consumer price index (CPI), which would have been 1.9%, way less than the 7.5% drivers will see?
Insurance companies’ rates have been capped or paused for several years, and this has resulted in premiums being less than what is needed to pay for claims and operational costs today. Last year, two insurers stopped offering auto insurance in Alberta due to their inability to price customers to reflect their actual costs.
The 2025 good driver rate cap seeks to balance affordability for Albertans with the need for insurance companies remain sustainable in the province, until the system reform can be implemented.
Without these modifications, it is likely Albertans will find it increasingly difficult to obtain the auto insurance coverage they need.
Will rates increase for the next two years until the new care-first system is operational?
Auto insurance rates will unfortunately have to go up to pay for the costs of the system we have right now.
Even with the modified rate cap, most insurance companies will still not charge a premium sufficient to cover their actual claims and operational costs. This is why a new system is necessary.
If the AIRB has a 10% total cap and good drivers have a 7.5% cap, does it mean that bad drivers only get a 2.5% cap?
Good drivers will be capped at 7.5%. All other drivers will be subject to rate increases that vary.
However, insurance companies will be capped at an overall rate increase of 10% in any 12-month period. With respect to this 10%, insurance companies will determine how to distribute the increase amongst its customers, subject to AIRB approval.
Drivers excluded from the good driver rate cap could see their premium increase greater than 10% in 2025.
I purchased the Accident Forgiveness Endorsement (SEF 39) on my auto insurance policy and I have had an at-fault accident, does this endorsement mean I still qualify for the Good Driver Cap?
No, the definition of Good Driver does not include drivers with an Accident Forgiveness Endorsement (SEF 39). If the driver has had an at fault accident within the last 6 years, they do not meet the criteria for a Good Driver, as defined by the government, and their premium will not be capped.
The SEF 39 only protects the driver’s premium from increasing in the insurance company’s rating system. Therefore, if the driver had the accident forgiveness endorsement on their policy at the time of the accident, the insurance company cannot rate them for the at fault accident, which will reduce the premium your insurance company charges.