(Photo: Catherine Falls Commerical/Getty)

Auto Insurance is Shifting Gears

By AMA Staff

Auto insurance can be very challenging to navigate at the best of times, and now the route is being recalculated. The provincial government has updated Alberta’s auto insurance legislation, especially around how claims will be handled. Get a clear view of the road ahead as Albertans gear up for changes that take effect in the New Year.

If there’s one big takeaway, it’s this: if you’re in a collision, your own insurance company will pay for covered damage to your vehicle, no matter who was at fault. This will reduce the back-and-forth between insurance companies to sort out who pays for repairs.

You might be wondering, “Does this mean my rates will increase even if it wasn’t at fault?” Just like today, if you weren’t at fault, you won’t see an increase in your premium because of the collision.

As of Jan. 1, 2022, the mandatory coverages you need to drive in Alberta will change. But don’t worry, if you’re already insured in this province, this will happen automatically. You’ll see the details in your next renewal package.

Under the current system, you must have coverage to pay for damage you cause to another driver’s vehicle, and to treat any injuries to others. In insurance terms, this is called Third Party Liability coverage.

Under the new system, there is a new mandatory coverage called DCPD (direct compensation for property damage). So, if a collision wasn’t your fault, instead of having the repairs paid by the other driver’s Third Party Liability coverage, the insured damage will be paid under your DCPD coverage.

It’s important to remember that DCPD coverage is only for damage to your vehicle caused by another driver. If you’re responsible for the collision, the damage will still be paid under your Collision coverage. While you aren’t legally required to have Collision coverage, keep in mind that your vehicle’s repair costs will come out of your pocket if you don’t have it.

As part of these legislative changes, there will be greater flexibility for insurance companies to expand the products they offer, including usage-based insurance. Some changes have already happened around enhanced medical and rehabilitation benefits following a collision, including increased limits and new approved treatments. The provincial government has also expanded the definition of minor injuries for pain and suffering claims. You can see all the changes at alberta.ca/automobile-insurance-reform.aspx.

This isn’t a no-fault system. Establishing fault is still important to determine things like the coverage your claim is handled under, if you’ll pay a deductible, and whether the collision will affect your premium at your next renewal.

Additionally, the new coverages also won’t change how injury claims are handled or your rights to compensation.

Breaking down the coverage you must have—and important options you’ll want to consider.

Mandatory Coverages
These are the coverages every Alberta driver must have after Jan. 1, 2022. If you’re already insured in Alberta, your coverage will automatically be updated.

NEW! Direct Compensation for Property Damage (DCPD)
Covers damage to your vehicle, including personal property in your vehicle resulting from a collision whenyou are not at fault. 

Third-Party Liability 
Covers injuries you accidentally cause to someone else. Third Party Liability also provides coverage if you’re responsible for damage to things other than vehicles (like if you hit someone’s fence). 

Accident Benefits
Coverage for medical treatment and rehabilitation costs for you, and your passengers, after a collision (no matter who is at fault for the collision). This piece has always been mandatory and there are no changes here.

Optional Coverages
Some types of coverages are optional in Alberta, but they are important. It’s a good idea to talk to an insurance advisor who can help you choose the best coverage for you.

Coverage for damage to your vehicle if you were responsible for the collision.

Coverage for damage caused by things other than a collision, like fire, hail and theft.

Get the full scoop on all of these changes
, including deductibles, what happens if you’re partially at fault and more