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What you need to know about car insurance in Alberta.

 

Who sets auto insurance rates in Alberta?

Alberta has a private auto insurance market, but the provincial government regulates prices. The two agencies responsible for overseeing car insurance rates are the Automobile Insurance Rate Board (AIRB) and the Office of the Superintendent of Insurance.

The system that Alberta uses to calculate car insurance premiums is unique to the rest of Canada.

Auto insurance companies in Alberta follow a grid system to determine premiums. The province created the grid to keep car insurance affordable. It establishes the highest premium insurance companies can charge for basic coverage (third party liability and accident benefits).

The grid accounts for where you live, how many years you've held your licence, the number of claims you've had in the last six years, as well as the number of driving convictions on your record.

The grid isn't used to set the price of optional auto insurance coverages, like comprehensive, collision, and all-perils insurance.

Here’s what else you need to know about how the grid system and how insurance companies use it:

  • When calculating insurance, companies have to compare their premium with the grid. They must charge the lesser of the two premiums.
  • This rule doesn't apply if you’ve had a driving or criminal conviction within the last three years, three or more at-fault claims within the last six years or you’ve been convicted of insurance fraud.
  • Premiums for drivers who remain claims-free and free of traffic tickets will decrease over time.
  • For each year without an at-fault claim, premiums can decrease by anywhere between 5% to 50%.
  • Inexperienced drivers who have completed a driver’s ed course start 10% below the maximum entry-level premium 
  • Each at-fault claim moves the driver up five rungs on the grid. It also results in extra surcharges (the same applies if you have a driving conviction).
  • Car insurance companies in Alberta must apply to AIRB for permission to raise rates across the board.

In 2017, the province barred insurance companies from raising premiums beyond 5%.

But, big changes are in store for Alberta drivers.

In late 2019, the 5% cap got scrapped. Customers are already seeing the effects of this decision in the form of higher auto insurance rates. AIRB approved 30% rate increases for some insurers.

Despite regulatory controls, Alberta auto insurance rates can vary. That’s why it’s important to compare insurance companies.

How much is car insurance in Alberta?

The cost of car insurance in Alberta can vary because car insurance is such a customized product. Automobile insurance rates in Alberta can depend on a variety of factors — some which are in your control and others which aren’t. That’s why, the best way to make sure you get a reliable estimate for car insurance in Alberta is to compare the Alberta auto insurance market online.

Car insurance calculators geared for Alberta drivers require less information, but this also makes them less accurate. With our help, you can find an affordable car insurance rate in Alberta in under five minutes that saves you hundreds on car insurance each year. Enter your postal code to start the form and LowestRates.ca will connect you with an Alberta car insurance broker in your area.

What factors determine auto insurance rates in Alberta?

Auto insurance rates in Alberta are influenced by a variety of factors. A good part of your rate is determined by your unique driver profile. Here's what makes up your driver profile:

Your driving record - Driving convictions on your record will result in higher rates. If you’re considered a high-risk driver, finding a low car insurance rate in Alberta might be a challenge. Learn more about finding a high-risk car insurance policy here

Your age and gender - On average, men tend to pay higher car insurance premiums than women. There are exceptions. But demographic data show that men are more likely to die in car accidents, drive under the influence, and are less likely to wear a seatbelt.

Your age - Young drivers looking for car insurance in Alberta also face difficulty, as demographic data shows that inexperienced drivers tend to wind up in more accidents. For this reason, car insurance for new drivers in Alberta is more expensive.

This factor doesn’t only impact young drivers, however. Adults between the ages of 50 and 70 get some of the lowest car insurance rates in Toronto. If you belong to this demographic, you probably have a long history of being insured and you might even have bundled your home insurance policy with the same provider of your auto insurance.  After age 70, though, you might see your rate begin to creep up because people in your age group are more statistically more likely to need to file a claim and need longer to recover from an injury. This is why car insurance for seniors in Alberta may also be higher due to a greater likelihood of accidents in that age group. 

Your driving experience -  In Alberta, the most an insurance company can charge a new driver is $3,163 (for third party and accident benefits coverage). That’s more than double the average provincial premium. Demographic data show that inexperienced drivers — that means less than eight years in Alberta — are more accident-prone. Again, this is why finding cheap car insurance for new drivers in Alberta can be a challenge.

Your insurance history - In addition to having a poor driving history, your insurance history can also play a role in determining your rates. If you’ve filed multiple claims or have a history of missing payments, you may be given a higher rate. Furthermore, new immigrants looking for car insurance in Alberta may also face challenges because they have no Canadian insurance history at all. 

Your income level - How much money you make can also impact your car insurance rates. A higher income may indicate to an insurance company that you’re less likely to get behind on payments. This is why students looking for car insurance in Alberta may face challenges securing an affordable rate.

The type of vehicle you drive - The price, make, model, fuel type, and age of a car factor into the final cost of your auto insurance. Sports cars can be the most expensive to insure.

Use and location of your vehicle - Using your car to drive to work will raise your premium. The average work commute is an estimated 30-40 km. The more time you spend on the road, the more likely you are to get into an accident. Also, your rate can increase (or decrease) based on where you park it. Parking it in a private, covered garage will lower your premium.

The amount of coverage you've selected - The more coverage you buy above the mandatory amount, the more your premium will cost. In Alberta, you must own at least $200,000 of third party liability and accident benefits coverage.

There are other factors that contribute to your rate. They are also largely out of your control:

Other drivers - Other customers with the same insurance company can push up the insurer’s loss ratio. Insurance companies pass the cost on to you.

Postal code - Insurance use postal code regions to set car insurance premiums. They look at the number of claims they’ve made out in that area and calculate rates. Drivers from some neighbourhoods are more likely to file claims than others.

High-loss ratios - In late 2019, Alberta auto insurance companies said they paid out $1.12 for every dollar they earned in premiums. This is a major justification for rate increases in Alberta.

Politics - Each new government tries to tackle the problem of rising auto insurance rates. In 2004, the Liberal government introduced the grid system. The NDP government in 2017 imposed a 5% cap on insurance companies who applied to raise premiums. In late 2019, the United Conservative Party removed the 5% cap in favour of allowing the market to set the rates.

How do I get car insurance in Alberta?

There are several ways drivers in Alberta can obtain a car insurance policy. One of the most common ways is to go directly to a private insurance company and apply for a policy. Many drivers also use an insurance broker, which is a company that works with and sells policies from multiple different insurance providers. A broker may have a deeper knowledge of Alberta’s car insurance market as a whole.

The best way to secure the best car insurance rates in Alberta is to compare the market before signing up for any policy. LowestRates.ca can help you with that.

How do Alberta auto insurance rates compare to other provinces?

Alberta auto insurance premiums are among the highest in Canada.

Average auto insurance rates by province

ProvinceAverage Rates
Ontario$1,505
British Columbia$1,832
Alberta$1,316
Newfoundland & Labrador$1,168
Manitoba$1,140
Northwest Territories$978*
Nunavut$963*
Yukon$812*
Nova Scotia$891
Saskatchewan$1,235
New Brunswick$867
Prince Edward Island$816
Quebec$717

Source: Insurance Bureau of Canada, 2019, "BC - Better Auto Insurance."

*Source: Insurance Bureau of Canada, 2017

Which cities have the most expensive auto insurance in Alberta?

These are the cities and districts in Alberta with the highest average auto insurance premiums, according to LowestRates.ca’s user data. 

  1. Edmonton 
  2. St. Albert 
  3. Calgary 
  4. Sherwood Park 
  5. Fort McMurray 

Which cities have the cheapest auto insurance in Alberta?

These are the cities and districts in Alberta with the lowest average auto insurance premiums, according to LowestRates.ca’s user data.

  1. Banff
  2. Canmore
  3. Jasper
  4. Medicine Hat

Will auto insurance rates in Alberta go down anytime soon?

Car insurance premiums in Alberta have been on the rise for a while.

Now that price caps are gone, we predict that trend will continue.

The Automobile Insurance Rate Board (AIRB) is in charge of approving or denying rate increases. Below, you can see the average annual approved rate increases for the last 10 years.

YearRate change
2008+2.5%
2009+3.6%
2010-1.35%
2011-1.0%
2012+1.6%
2013+2.4%
2014+3.6%
2015+2.3%
2016+2.5%
2017+3.5%
2018+6.9%

How can I get cheap auto insurance in Alberta?

There are several ways to get cheap auto insurance in Alberta:

  • Shop around for the best quote.
  • Try usage-based auto insurance, which charges you based on your mileage.
  • Pay premiums on time.
  • Maintain a good driving history.
  • Reconsider adding extra coverage to your base insurance policy.
  • Complete a certified driver training program.
  • Insure all your vehicles with the same company.
  • Bundle your home insurance with your auto insurance.
  • Use winter tires when needed (insurers offer discounts)

Which providers offer the cheapest insurance in Alberta?

There isn’t a car insurance company in Alberta that offers cheap insurance to all its customers. Car insurance companies base their premiums on a lot of factors. These include underwriting standards, losses, the wider economy, and also your individual driving habits.

That’s why we emphasize shopping around before locking into an insurance policy.

There’s a strong chance that another car insurance company can offer you a better rate than the one you’re with right now.

Your lowest and highest quote can vary by hundreds of dollars. It’s pretty eye-opening. Try comparing quotes for free.

Do Alberta car insurance companies check your credit score?

In Alberta, it is legal for a car insurance company to use your credit score to set your premium. But they can’t do it without your consent. You can decline to let an insurance company see your credit score.

Ontario and Newfoundland and Labrador bars car insurance companies from using credit score data.

Is auto insurance required in Alberta?

Yes. Drivers are required by law to carry insurance on their vehicle.

What's the minimum requirement for auto insurance in Alberta?

You're required to carry $200,000 in third-party liability insurance on your vehicle. Without the minimum amount of coverage, you won't be able to register your automobile..

What kind of auto insurance system does Alberta have?

Alberta operates under a primarily tort-based system with some aspects of a no-fault auto insurance system. In an accident, your car insurance company will pay for some of your costs and you’ll also have to seek compensation from the other party’s insurance company.

Which types of insurance are available to Alberta drivers?

Third-party liability coverage plus accident benefits coverage - This refers to a basic auto insurance policy. You must have liability coverage with a benefit of at least $200,000. In addition, Albertans must carry accident benefits with a value of $50,000.

 

Collision coverage - Alberta drivers can also add collision coverage to their basic insurance policy. Collision coverage pays for damage to your vehicle that’s caused by collision with another object.

 

Comprehensive coverage - Albertans can add comprehensive car insurance on top of a basic insurance policy. Comprehensive insurance covers you against all insurable perils, except damage from a collision.

 

Named perils - This endorsement pays for losses caused only by perils you have requested coverage against.

All perils - A cross between collision and comprehensive insurance, it offers the most coverage.

Not every province has the same requirements for car insurance coverage. Some types of coverage that are mandatory in other provinces but not in Alberta include direct compensation property damage (also known as DCPD) and uninsured motorist coverage (in Alberta, this is covered by your own insurer).

What are the penalties for driving without insurance in Alberta?

If you're convicted of driving without insurance in Alberta, you'll have to pay a fine ranging from $2,500 to $10,000 for your first offence, plus a 15% fine surcharge. Second offence fines range from $5,000 to $20,000, plus a 15% surcharge. Repeat offenders could also face up to 60 days of jail time and a licence suspension if convicted.

Once you're convicted of driving without the minimum auto insurance coverage, you'll be identified as high risk, and you may face higher auto insurance rates in the future.

What's the minimum legal driving age in Alberta?

In Alberta, you can begin the licensing process when you turn 14.

To get a learner's licence in Alberta, you must pass a written rules-of-the-road knowledge test and a vision test. Once you pass, you'll be issued a licence, but you must be accompanied by a fully licensed driver who is 18 or older. Of course, as a learner, you can only operate your vehicle while maintaining a 0.0 blood alcohol concentration (BAC).

How do I get a probationary licence in Alberta?

First, you must be 16 or older and have held your learner's licence for at least 1 year. Then you have to pass the Alberta Class 5 road test

How do I get a full licence in Alberta?

After holding the probationary licence for two years, you must pass an advanced road test. Once you pass, you’ll get your Graduate Driver's Licence.

How does not having a full Alberta licence impact my auto insurance rate?

Not having a full licence will impact your auto insurance premium. Inexperienced drivers pay higher than average car insurance premiums.

We recommend that teenagers get added as secondary drivers on their parents' auto insurance policy. Start building up their driving record — the longer they have a record (that’s clear of claims or convictions), the cheaper their insurance will be when they apply for their own policy.

Young drivers pay a lot for insurance in Alberta, but they also can find the most savings by comparing car insurance quotes.

Is ride-sharing insurance available in Alberta?

Yes. Provincially-approved ride-sharing insurance is available in Alberta, both as an extension of personal policies and as a blanket policy for Transportation Network Companies (TNCs). That means drivers for Uber and other ride-sharing companies can get the right coverage and stay protected on the road.

Is usage-based insurance available in Alberta?

Yes. In 2016, Alberta was the first Western province to introduce usage-based insurance (UBI) policies. Now local drivers can lower their insurance premiums by opting into a UBI plan and driving responsibly.

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