Changes to auto insurance across Canada in 2021 – Driving

Province by province, here’s a recap of what drivers can expect going forward
A lot has changed in the auto insurance industry in the last two years.  
Shortly after the pandemic began, many people across the country abandoned their morning commutes for a work-from-home model. During this time, fewer drivers took to the roads. In response, auto insurance companies offered rebates to reduce premiums and additional emergency relief measures to assist those facing financial hardships. Still, many drivers saw their rates rise at the end of 2020 
As the COVID-19 vaccines became more widely available in 2021, retail businesses reopened their doors to in-person shopping, and companies welcomed employees back to offices. The pent-up consumer demand quickly impacted the automotive industry, and a global microchip shortage made certain cars hard to buy. And, since new vehicles were in short supply, used car prices soared.  
In an effort to reduce car insurance costs, many drivers turned to usage-based insurance (UBI). In fact, LowestRates.ca data showed a 43 per cent year-over-year increase in the percentage of drivers choosing UBI when filling out an auto insurance quote on our site in 2020. 
At the same time, regulatory bodies from several provinces laid the groundwork for auto insurance reform and took steps to improve insurance systems. Many of these initiatives will take effect in 2022.  
Here is a look back at the important auto insurance changes across Canada from 2021 and what drivers can expect this year.  
Some Albertans faced premium increases upon renewal last year following the scrapping of the former NDP government’s 5 per cent rate cap in 2019. While the average increase was about 3 per cent, one man reported an 18 per cent increase in his auto insurance rate.  
Fortunately, drivers can anticipate reform. On January 1, 2022, Bill 41 came into effect, aiming to stabilize Alberta auto insurance costs and improve medical benefits for Albertans injured in collisions. Legislative changes have also enabled direct compensation for property damage (DCPD), which means drivers will work with their own insurance company to cover repair costs if they are found not at fault for the collision rather than a third-party, reducing costs.  
On May 1, 2021, The Insurance Corporation of British Columbia (ICBC) rolled out its no-fault auto insurance system, called Enhanced Care. Under this system, drivers receive accident benefits from their insurance company for a claim, regardless of fault.  
The new care-based system will assist anyone injured in a collision in B.C., providing them with medical care, recovery options, and financial support.  
In April 2021, Manitoba Public Insurance (MPI) began offering enhanced Autopac coverage and deductible options. MPI increased basic third-party liability to $500,000 from $200,000 to provide greater protection. Vehicle owners will also get a basic maximum insured value of $70,000, up from $50,000.  
Several auto insurance companies in New Brunswick received approval to use drivers’ credit scores to formulate their premiums — despite heavy pushback from consumer advocates. Drivers looking for auto insurance in New Brunswick who agree to share their information can receive a discount; however, those who decline will not be penalized.  
In 2021, the Cap on Minor Injuries was adjusted to $8,937 as per the Automobile Accident Minor Injury Regulations. The cap represents the total compensation a person can receive for minor injuries sustained in a collision.  
Auto insurance premiums in Nova Scotia continue to be among the cheapest in the country. 
In November 2021, the Financial Services Regulatory Authority of Ontario (FSRA) released “Take-All-Comers” guidance to clearly state the legal obligations of auto insurance providers in the province. Insurance companies, agents and brokers must provide consumers with the lowest available rate, offer all eligible consumers a quote or renewal, and accept all business from consumers that meet insurance providers’ approved rules.  
This guidance intends to improve fairness in the Ontario auto insurance system.  
The Canadian Automobile Association (CAA) started offering pay-as-you-go insurance to drivers on Prince Edward Island. The MyPace policy charges rates based partly on driving record and partly on kilometres driven. People who drive fewer than 12,000 kilometres annually can benefit from this type of auto insurance in P.E.I. 
Quebec drivers saw a meagre increase in their insurance contributions applicable to driver’s licences in 2021. However, holders of Class 5 or 6 licences — except for Learner’s licence holders — will receive a payment holiday for the insurance contribution in 2022 and 2023.  
The insurance contributions sustain a public automobile insurance fund in the province. Insurance rates increase when more traffic collision victims or their families are awarded compensation. However, a significant decline in claims has led to a fund surplus, allowing some drivers to skip insurance contributions this year. 
Drivers will still have to pay for their licence fees and private Quebec auto insurance costs. 
Saskatchewan Government Insurance (SGI) adjusts rates annually based on the Canadian Loss Experience Automobile Rating (CLEAR) system, which looks at several risk factors, such as vehicle type and risk of claim, to determine rates.  
The CLEAR updates in 2017-2019 were revenue-neutral and had no impact on rates. In 2020 and 2021, the CLEAR updates were cancelled due to the pandemic. However, rate changes will take effect on April 1, 2022, as a rate rebalancing effort.  
SGI also implemented enhanced injury benefits in May of 2021. The additional support benefited more than 1,200 customers.  
Buying car insurance in the Yukon became slightly more expensive last year. As of January 1, 2021, a single tax rate of 4 per cent will be applied to a driver’s premium if they purchase insurance from a provider that’s not licensed in the territory — an increase of 2 per cent from the year before. 
As more drivers return to their commutes and take trips for leisure, more collisions (and, as a result, claims) will likely occur, driving auto insurance rates up. Since auto insurance is regulated, however, the rate changes won’t happen immediately. The good news is that once collision rates return to previous numbers, savings should find their way back to the consumer.  
LowestRates.ca is a free and independent rate comparison website that allows Canadians to compare rates from 75+ providers for various financial products, such as auto and home insurance, mortgages, and credit cards.
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