No doubt, if you are from Alberta, you've heard about the auto insurance reforms. But, how do the new reform measures affect you?

A little history...

For years, Alberta drivers said they were paying too much for their auto insurance. In July of 2003, the Alberta Government responded by announcing they were going to address consumer concerns over rising auto insurance rates.

Thus the auto insurance reforms in Alberta began. The first step undertaken by the provincial government was to freeze auto insurance rates. Effective October 30, 2003, this meant that if a person's vehicle or driving status did not change, their rates also would not change.

The freeze applied to premiums collected for mandatory insurance and optional coverages, such as collision and comprehensive. The reforms now in place address the costs of mandatory insurance only, Third-Party Liability (sometimes called personal liability and property damage or PL/PD) and Accident Benefits (sometimes called Section B). The optional coverages are not currently capped, however, this does not mean they won't be in future.

How will you be affected by the reforms?

It depends. While all Alberta drivers will be protected by a maximum premium that they can be charged, the impact of the reforms will vary depending on your driving history.

Experienced drivers with clean records
According to the Insurance Bureau of Canada (IBC), the premium grid introduced in the reforms will not affect this group. The reason being that this group of experienced drivers are already paying less than the maximum premium allowed. The good news here though, is this group will get to enjoy a 5% reduction in the mandatory insurance premiums they currently pay.

Young drivers
Before the reforms were introduced, premiums were in part calculated using age, sex, driving experience, insurance history and vehicle information. Now, age and sex have been removed as variables when the rate grid is being used to determine premiums. What this will likely mean to young, male drivers is a better rate then what they would have received before the reforms.

Drivers with poor driving records
Drivers with a poor driving record will continue to pay more for their auto insurance than any other group, but now the premium they can be charged has been capped. What's more, with the introduction of the "all comers rule", drivers in this group will be able to find the coverage they need easier than ever before.

What is the "all comers" rule? The "all comers" rule requires insurers to offer coverage to anyone who wants it regardless of their age, sex or marital status. There are examples, however, when coverage can still be refused. One example is for non-payment of all, or part of a premium.

There's more to the reforms than just the premium grid

While the premium grid may be one of the most talked about feature of the auto insurance reforms there are others you'll be interested in knowing about:

5% premium reduction
A part of calculating your new premium under the reforms is the application of a 5% reduction to your compulsory insurance premium. This 5% rollback is available to drivers who are determined, by their location on the grid, to be paying less than the capped, or maximum amount.

Treating injuries
The aim of the reforms when it comes to treating injuries from a motor vehicle accident is to deliver fast and effective treatment.

The treatments for minor injuries (such as sprains, strains and minor whiplash) are pre-approved and medical practitioners will bill the insurance companies directly. This means that your out-of-pocket expenses for the treatments you receive should be significantly reduced. One change to note however, for minor injuries, is if there is an award issued for pain and suffering it is capped at $4,000.

For major injuries, the Accident Benefits portion of your insurance (Section B) which is available for medical and rehabilitation services will increase from $10,000 to $50,000.

Looking for more information?

The reforms in Alberta are a big deal.

If you're looking for more information then check out:

* Although accurate at the time of original publication in October, 2004, these reforms are subject to change and Kanetix is not responsible for any damages caused as a result of the information included in this article. The information collected and compiled here is intended to simply act as a guide.

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