Alberta drivers with distracted driving tickets struggling to get full auto coverage

Alberta drivers with distracted driving tickets struggling to get full auto coverage | Insurance Business Canada

Alberta drivers with distracted driving tickets struggling to get full auto coverage

Distracted driving in Alberta is one problem - but being convicted of distracted driving in the province causes even more insurance headaches, as industry professionals have revealed.

Alberta legislation mandates auto insurers offer liability and accident benefits coverage. But companies can opt not to provide collision and comprehensive insurance, since they are considered optional by the law. While collision and comprehensive insurance are optional, it is usually required when the car is either financed or leased.

For some drivers, this piece of legislation has led to a vicious downward spiral. Their distracted driving convictions can turn insurers away from covering them, and without any comprehensive insurance to speak of, the drivers will not be able to take out a loan for their vehicles.

Ray Robichaud, CEO of Edmonton Auto Loans, told CBC News that he worked for eight months with one client who could not land a car loan. That client had been denied comprehensive and collision insurance due to a distracted driving conviction and two accidents on his record.

Armour Insurance CEO Rob Marusin also confirmed that it is becoming more common for clients with convictions to be turned down for comprehensive and collision insurance.

“It’s created a bit of a hard market for consumers,” he said.

Marusin added that some insurers are offering the optional insurance, but are requiring their high-risk customers to pay upfront for the full year.

“We try and help everyone, but right now … we unfortunately are having to turn people away because they maybe can’t afford to pay the full premium for the year,” the CEO remarked.

Some industry experts believe the trend of insurers turning down customers ticketed for distracted driving is a knee-jerk reaction to the 5% cap on auto insurance rates implemented by the former NDP government.

“I think that was creating some problems for them, so this was one solution — albeit imperfect solution — but it was one solution that I believe some [companies] are undertaking,” explained Insurance Brokers Association of Alberta CEO George Hodgson, speaking to CBC News.

“After annual rate increases were capped at 5% in late 2017, we learned that some insurance companies were taking steps to limit their business as a way of minimizing their losses,” added Alberta Treasury Board and Finance spokesperson Jerrica Goodwin in conversation with the news outlet.

Other brokers have also noticed that insurance can increase by up to 25% after a distracted driving conviction – a penalty usually reserved for major driving convictions, since minor convictions typically only lead to a 15% increase. However, insurers have the option to apply to Alberta’s Superintendent of Insurance and the Alberta Automobile Insurance Rate Board to treat distracted driving as a major conviction for the purposes of premium calculation.

“They have analytics that point to the fact that if an individual has a distracted driving ticket, the likelihood of an accident is greater,” HDF Insurance general manager Leonard Belland told CBC News. “I’m sure their premise is … the odds of having an at-fault accident definitely goes up.”