HomeInsuranceWhy is auto insurance so expensive in Alberta?

    Why is auto insurance so expensive in Alberta?

    Alberta premiums have gone up specifically due to soaring legal fees and other costs associated with lawsuits following accidents, which is not the case in other provinces. That’s thanks to a culture of litigation in the province, which isn’t as present in the rest of Canada.

    Over the last 10 years, the average size of accident benefit claims increased by 147% in Alberta, compared with 53% or less in other provinces. Put plainly, claims are higher in Alberta than elsewhere in Canada, due to bodily injury claims and escalating legal costs in Alberta. 

    The province of Alberta has consistently had the highest claims frequency for third-party liability, accident benefits, comprehensive and collision coverages, says a report from consulting firm MNP commissioned by the IBC.

    Huge auto-insurance legal costs are to blame as well. These costs have gone up in the province by 38% since 2018 and account for about 20% of the premiums drivers pay for mandatory auto insurance coverage in Alberta. 

    “This is equivalent to nearly $200 for each policy annually,” the IBC has stated in a recent report.

    Another contributing factor, according to MNP, is the increasing cost and length of car repairs. A Toyota RAV4 bumper costs $4,144 to replace today, up 50% from $2,769 in 2017. Also, 24% of auto sales in Alberta are of trucks, which is higher than the national average of 18.1%.

    Supply chain issues have slowed down auto parts replacement, as any car owner who’s had to cool their heels for a part to arrive at their mechanic can attest to. This waiting has had a knock-on effect of making car rental lengths longer in Alberta as well. 

    TOYOTA RAV4 model yearCost of repairTotal increase of repairs
    201717 parts total cost of repair: $2,769n/a
    202239 parts total cost to repair: $4,14450% increase from 2017 (newer vehicles have complex technology and more parts to repair)

    Source: IBC

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