Auto insurance to climb for central Alberta motorists

It’s going to be tough on many businesses, says local courier company owner

Central Alberta motorists should brace themselves for what could be a 15 per cent, or higher, hike in vehicle insurance.

“It’s going to take a big crunch out of the small business guy — well, out of everybody — but it’s going to be really tough on small businesses,” predicts Ken Burgess, owner of K.C. Courier in Red Deer.

The local economy seems to be slowing, said Burgess, who believes there’s less optimism about a recovery now than there was in June, so any additional expense will create hardship.

He understands higher accident claims are spurring the significant cost increase. But Burgess believes those who cause accidents should be slapped with higher rates — “they shouldn’t be across the board. The rest of us, who don’t text while driving, should be getting a break.”

Although Alberta has had a cap on vehicle insurance increases since 2017, Burgess said his and his wife’s personal auto insurance already went up to $2,200 from $1,800 since last year.

“I’m going to be afraid to open any letters from my insurance company …”

George Hodgson, CEO of the Insurance Brokers Association of Alberta, said more expensive repairs and higher accident liability settlements caused insurance companies to pay out an average of $112 for every $100 they took in.

This 12 per cent difference was caused, in part, by the annual cap on vehicle insurance that was recently removed by Alberta’s current United Conservative government.

Hodgson expects auto insurance will now be increasing by at least that much. But one company, Avila Canada, has alerted brokers of an intended 15 per cent across-the-board hike in January, and Wawanesa also confirmed that it will be hiking rates due to rising costs.

Hodgson said replacing a car or truck bumper that contains motion and distance sensors is “astronomically” more expensive than installing a regular bumper, while a windshield containing anti-frost technology costs much more to replace than a traditional windshield.

Dustin Benjamin, general manager of Scott’s 180 Collision of Red Deer, confirmed many computerized car parts are designed to interact with other vehicle systems, so it’s hard to avoid replacing them at a much greater cost than standard parts.

For instance, a regular replacement bumper costs $600, but all of the computerized sensors could add nearly $3,000 to the bill — and that’s not including labour costs, said Benjamin.

He recently had to replace two sensor-equipped front headlights for a Lexus that cost $5,000 — each.

Hodgson said injury lawsuits have also driven up insurance costs. While Alberta has a cap on payouts for soft-tissue injuries, some lawyers have found loopholes in the legislation and have gotten some large awards for their clients — which has also driven up insurance costs, he added.

The impact of significantly higher vehicle insurance will especially be felt by trucking and taxi companies.

Doug Miller, of Red Deer’s Doug Miller Transport, said with his good driving record, he will be looking for the best deal possible for his one-truck operation when he renegotiates his insurance later this month.

Given the state of Alberta’s stagnated economy, any large insurance hike would compound difficulties for a lot of companies, said Miller.

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