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Auto Insurance

91% of Canadians don’t know how cannabis legalization will affect car insurance

By: Staff on October 15, 2018

Cannabis is going to be legal on Oct. 17. It’s a big day for the country, but for drivers, it’s created a lot of questions.

We conducted a survey this month of 1,527 Canadian drivers and found 91% don’t know how legalization is going to impact their car insurance rates. The lack of knowledge was across the board, whether it was drivers in Ontario or those in Atlantic Canada.

Like alcohol, cannabis is considered a substance that impairs your ability to drive. Police forces in Canada have slightly different policies on how this is punished, but the bottom line is that if an officer pulls you over and suspects you of being impaired, you can be hit with penalties ranging from tickets, license suspension and even jail time.

About 4.2 million Canadians, or 14% of the population, reported using cannabis in the past three months, according to recent data from Statistics Canada. It’s very possible that number will rise when cannabis is legalized.

However, it’s clear that Canadians have many questions around cannabis and auto insurance. We spoke to our partners, including those at the Canadian Automobile Association (CAA), and industry associations, such as the Insurance Bureau of Canada, about what Canadians should know about legalization and insurance. It should be noted that a number of insurance companies had no official comment when we contacted them — suggesting many were still rushing to catch up on the new legislation themselves.

Will it make car insurance rates go up?

Right now, insurance companies are taking a wait and see approach to what effects — if any — cannabis legalization will have on insurance rates. Ultimately, if legalization leads to more impaired driving and more accidents, all drivers will see their rates go up.

Elliott Silverstein, manager of government relations at CAA, said everyone in the insurance industry is closely watching what effects legalization will have.

“Once legalization takes effect, we’ll also have a better understanding of what is going on on the road,” he said. “So I think this is an ongoing work in progress, not just for CAA but for the industry and the province at large.”

However, when you look at other jurisdictions that have legalized cannabis, it’s clear that there is a potential for rates to rise. A survey from The Zebra, a U.S. insurance comparison site, found that auto insurance premiums in Colorado jumped by 54% between 2011 and 2017 — the third highest increase for any state in that period. Cannabis was legalized in Colorado in 2014 and in that time, the state has seen an uptick in accidents.

“There was a direct correlation in the increase in traffic accidents and fatalities that were in cannabis impaired drivers that were at the wheel,” said Vanessa Barrasa, manager of media relations at the Insurance Bureau of Canada (IBC). “So we don’t want to see those kind of statistics here in Canada.”

Can you smoke and drive?

There’s a lack of clarity around the legal limit of cannabis you can have in your system before you drive. Ontario legislation that came into effect July 1 says there’s a zero-tolerance policy for those with G1 and G2 licenses. Federal legislation, which came into effect in June, says if a driver is found to have any more than five nanograms of THC per milliliter of blood, they could face a minimum fine of $1,000 and up to 120 days in jail.

Being pulled over while impaired by cannabis can result in higher premiums. Right now, police forces are still unveiling how they’ll determine impairment, but some methods include roadside saliva tests and the 12-step process (however, these methods have received criticism).  

Most police forces in Canada allow officers to use their discretion when it comes to determining whether someone is impaired.

“We all know that being charged with a DUI can raise your premiums,” said Barrasa. “So we can only expect that being charged with a similar type of impairment charge [under the influence of cannabis] would then affect someone’s premium.”

What about medical cannabis?

Regardless of whether you have a licence for medical cannabis or not, officers can use their discretion to determine impairment. The one exemption when you have a medical licence is the zero tolerance policy — drivers who have a medical cannabis license will not face “zero tolerance” if they have a G1 Or G2 licence.  However, an officer can still charge such licenced drivers with impairment.

What are the penalties?

For impairment, rules differ between police forces in Canada.

In Ontario, a first offence for impaired driving results in a three-day licence suspension and a $250 fine (beginning in January 2019).

If you’re judged to be impaired a second time within the next five years, you will face a seven-day licence suspension and a $350 penalty. You must also attend a mandatory education program (this applies for a second offence committed within 10 years).

Again, the rules differ between jurisdictions. As mentioned above, federal rules for cannabis impairment (which means if you’re in areas policed by the RCMP) can result in steeper fines and even jail time.

So, how does this all affect rates?

A licence suspension will impact your insurance rates. Data from shows that a driver who has a licence suspension in the past for alcohol impairment can pay as much as $265.92 more a year for car insurance. For instance, a woman born in 1985 who has a clean record can expect to pay $135.67 a month for car insurance in Ontario. But if she has a licence suspension within the past three years, that rate rises to $157.83 a month.

The other side of the coin is overall rates. While you may not use cannabis, if cannabis legalization results in higher accidents — as is the case in Colorado — all drivers will likely face higher car insurance rates. That’s because insurance companies raise rates for all drivers if their overall costs go up.

Right now, our partners are telling us that the industry is focusing on pushing awareness so that drivers aren’t getting behind the wheel when using cannabis.

“I think from our perspective, this is a very new conversation in the sense that there’s so much happening, there’s so much attention on this,” said Silverstein of CAA.  “I think the opportunity here is we’re not trying to tell people whether they should or should not be using these types of products, but it’s about making sure they’re making the right choices.”