Alberta’s new auto insurance will change the way insurers handle claims and calculate premiums


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New mandatory auto insurance coverage will change the way insurers in Alberta handle vehicle damage claims in the new year and the way premiums are calculated.

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As of January 1, drivers will claim damage to the vehicle for which they are not responsible from their own insurance companies rather than the insurers of the drivers at fault.

The new coverage, known as Direct Compensation for Property Damage (DCPD), is provided for in Bill 41, the Act to Amend the Insurance Act, which was enacted almost a year ago. .

Aaron Sutherland, vice president of the Insurance Bureau of Canada (IBC) West, says the change will create a more efficient and fairer system.

“Your own insurance company will pay for repairs to your vehicle when you are not at fault for an accident,” he said, adding that similar systems exist in all other provinces.

In the current system, Sutherland explained, vehicle damage is covered by third party liability, which means that in the event of a collision between two vehicles, the offending driver’s insurer is responsible for repairing the other’s vehicle. driver.

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“If someone else hits your car, your insurance company must subrogate this damage to the offending driver’s insurer,” Sutherland said, referring to the “round-trip” process by which insurance companies determine who will pay for a collision claim. “It can lead to complications, delays, and this (change) eliminates all of that. “

In an October 18 notice to Albertans, Mark Brisson, the province’s superintendent of insurance, notes that the DCPD will only cover damage for which drivers are not responsible. If drivers are responsible for damage to their own vehicles, they can make a claim with optional collision coverage.

According to the notice, the DCPD settlement sets out rules for determining who is at fault in more than 40 “accident scenarios,” but these rules do not apply to other types of claims, such as personal injury. The DCPD does not prevent drivers from bringing legal action for other damages, adds the notice, such as personal injury resulting from a car accident or other property damage that is not covered by the DCPD.

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In an emailed statement to Postmedia, Kassandra Kitz, senior press secretary for Alberta Treasury and Finance, said DCPD claims will not affect drivers’ premiums, although at-fault drivers for collisions will still be held accountable, pay higher premiums and have these incidents noted. on their driving record.

However, the change will have an effect on how insurers calculate premiums, which will soon be based on the type of vehicle covered.

“Today, if you have a cheaper vehicle, you could hit a more expensive vehicle on our roads, and your insurer should factor that into your premiums,” Sutherland explained. “If you have a cheaper vehicle, you pay more, because of the likelihood that you might hit someone while driving a fancy car, for example. “

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But under the DCPD, he added, insurance companies will know what type of vehicle they could pay to repair and can match drivers’ premiums with the cost of repairing those vehicles.

“It’s a fairer way to price insurance,” Sutherland said.

According to the Alberta Automobile Insurance Rate Board, the move to DCPD means that 42 percent of policyholders will see a reduction in premiums, while 15 percent will see no change and 43 percent will have higher premiums.

However, Sutherland added, drivers can also lower their premiums through deductibles, the amount policyholders pay for a repair before insurance companies cover the rest.

According to the IBC, 73 percent of drivers will see no change to their premiums or an increase or decrease of up to five percent. However, he adds, nine percent will see an increase of five percent more, while 18 percent will save more than 5 percent.

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