Alberta drivers who are still smarting from a recent rate hike may wonder what all the hullabaloo is about between those who say private auto insurance is better than public auto insurance in the pursuit of the lowest rates.

Shortly after the Automobile Insurance Rate Board (AIRB) in Alberta gave 20 auto insurers the green light to increase their rates in mid-January (the average increase is about 10%), a quarrel about public versus private car insurance erupted in the media between the Insurance Bureau of Canada’s (IBC) Alberta chapter and the Insurance Brokers Association of B.C. (IBABC).

What initiated the two industry bodies’ back-and-forth exchange was an IBC report comparing the average auto insurance premiums of drivers in Alberta and B.C. That report states drivers in Canada’s most-westerly province pay, on average, 42% more for auto insurance than motorists in Alberta. The IBABC took exception to that assertion by responding, “no two provinces are alike in their driving exposure or auto insurance system” before calling Alberta’s free-market auto insurance system “fractured”.

Interestingly, in early February, the B.C. government announced an overhaul of the publicly managed vehicle insurance system in that province to reduce premiums and the “financial dumpster fire” – as B.C. Attorney General David Eby calls it – that is the Insurance Corporation of B.C.’s taxpayer-backed balance sheet.

What Are the Benefits of Private Auto Insurance?

While the ‘private auto insurance is cheaper’ perspective does not always prove to be true, the average premium in B.C. as of October 2019 is $1,832. By comparison, the average premium in Alberta is $1,316.

Among the benefits private insurance offers, competition between insurers tends to spark more innovation, choice, and value for consumers. Taxpayers do not subsidize private insurance, whether they are drivers or not. Drivers’ premiums are determined by many factors, including the cost of claims. Private insurers also offer things public insurers do not like first-accident forgiveness, new vehicle replacement coverage (which replaces your new car if it is a total loss within the first three years), as well as a range of other discounts.

What Are the Benefits of Public Auto Insurance?

Supporters of government-run, taxpayer-financed auto insurance say the benefits include a one-size-fits-all approach to deductibles, and drivers are not required to carry proof of insurance since their policies are tied to their licences or vehicles. Additionally, they say public insurance is better equipped to absorb marketplace turbulence without passing those costs onto consumers.

Which Provinces Offer Public Auto Insurance?

Of Canada’s 10 provinces, three are government-owned and operated car insurance systems: B.C., Saskatchewan, and Manitoba. In Quebec, the government manages auto insurance for bodily injuries; otherwise, private insurers provide insurance for damage to property. The other six provinces – Newfoundland and Labrador, Nova Scotia, New Brunswick, P.E.I., Ontario and Alberta – have private auto insurance systems, as do Canada’s three territories (Nunavut, Yukon, and the Northwest Territories). According to data from IBC, the average auto insurance premium in each region varies.

What Is Fuelling Auto Rate Increases in Alberta?

In 2018, IBC said auto insurance claims hit a mind-blowing $18.2 billion in Canada – 83.8% of that sum due to collisions and other incidents involving private passenger vehicles. By comparison, insurers paid more than $12 billion to settle auto accident claims in 2017.

The rising cost of settling a growing number of claims is one reason for the recent rate hike in Alberta. Another was the provincial government’s decision not to renew a 5% cap per year on car premium increases, as well as the rising threat of distracted driving and how climate change may be changing weather patterns in the province. Furthermore, an IBC spokesperson told the Edmonton Journal car injury lawsuits are the most significant factor driving up insurance costs.

Then there is the high rate of auto theft in Alberta. Numbers from Statistica in 2018 shows that after Ontario, Alberta has the second-highest rate of auto theft in the country despite having a significantly smaller population (Alberta represents 11.6% of Canada’s population and Ontario 38.6% as of July 2018 according to Statistics Canada).

What Can Alberta Drivers Do to Lower Their Premiums?

There are a few ways motorists in Alberta can keep their auto rates low, or find a lower premium:

  • Increase your deductible. The higher your deductible (the amount you pay before your insurance kicks in for a collision repair, for example), the lower your premium.
  • Consider signing up for a telematics program. Many insurers offer their customers at renewal time the opportunity to sign up for a telematics program (aka usage-based insurance) to monitor how and when you drive. By allowing an insurer to track your safe-driving habits, you can potentially save money each month on your premium.
  • Drive defensively. Avoid racking up speeding fines or other traffic infractions – especially a distracted driving conviction – and don’t get into a collision.
  • Drive less often. If possible, reduce the number of kilometres you drive annually by carpooling, taking public transit, or riding a bike to work.
  • Bundle your home and auto insurance. Most insurers will provide you with a discount if you buy insurance for both your vehicle and home or condo.
  • Shop around for insurance rates. Don’t automatically renew your auto policy; take the time to explore your options.
Liam Lahey

Liam Lahey is a versatile, seasoned writer and editor. He worked as both a staff writer and freelance writer for many business and technology publications as well as for several newspapers. He writes about home, auto, and travel insurance, and is the media spokesperson for RATESDOTCA.

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