The Insurance Corporation of BC announced yesterday that it has plans to drop insurance coverage for high-end luxury vehicles in an effort to reduce the instances of costly repairs and relieve pressure on basic rates for regular car owners.
ICBC made the announcement on top of a 4.9% rate increase for basic auto insurance this year, the Vancouver Sun
reported. The changes only apply to private passenger cars, so commercial trucks, pick-up trucks, collector cars, limousines and motorhomes are excluded from the increases.
The insurer chose to end luxury car coverage to offset the severe rate hikes it is anticipating for the years to come. Hypothetically, the ICBC believes it would have to raise its rates by 6.4% in 2017, 7.9% in 2018, 9.4% in 2019 and 7.9% in 2020 - rate increases that exceed the 4.9% cap set by Premier Christy Clark.
“I want to reassure the public that these are extreme projections that do not consider the actions the BC government and ICBC are taking to reduce the pressure on rates,” Transportation Minister Todd Stone said. “We are not going to allow a scenario that would provide for that level of basic rate increase to actually happen here in British Columbia.”
Stone said that one of the things the ICBC could do to prevent the projected increases would be to refuse coverage for luxury cars that are worth over $150,000, as their repair costs drive up basic rates. The minister also revealed that legislation would be passed to force luxury car owners to secure private insurance.
Until then, Stone said that luxury car owners will have to pay twice their ordinary basic insurance and ensure that their premiums can fully cover the cost of any repairs.
Stone told Vancouver Sun
that luxury vehicles are six times more costly to fix in a crash than ordinary vehicles. He also shared that there have been 30% more luxury cars on the road in the past three years, with Greater Vancouver having one of the largest concentrations of high-end luxury cars in North America.
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