Insurance companies in Alberta have been raising their minimum deductible for auto insurance for several reasons. They are often related to increasing claims costs as well as risk management strategies. Here are some of the reasons that auto insurance companies in Alberta have raised minimum deductibles:
Encouraging Risk Management:
A deductible is the amount clients must pay out of pocket in the event of a claim. Raising minimum deductibles can incentivize the clients to manage their risk more carefully. Clients may drive safer, maintain their vehicles better, and be more cautious in general.
Managing Insurance Premiums:
The cost of vehicle repairs and part replacement has been increasing steadily due to supply chain issues and inflation. Vehicles cost much more to replace and repair in the event of the claim. When claims increase, insurers charge higher premiums. Raising the deductible allows consumers to take on some of the responsibility in the event of a claim, thereby avoiding an increase to their premium.
Increasing weather-related damage:
Alberta is prone to extreme weather conditions, like hailstorms, for example. These types of claims become more frequent due to climate change, so insurance companies may raise minimum deductibles to so customers take steps to manage their own risk and reduce the number of low dollar value claims, where the damage is minimal.
Lowering the impact of small claims:
Raising minimum deductibles will lower the number of small claims. Lowering the number of small claims filed will reduce insurance companies’ administrative costs and overall payout, which will help to maintain a lower premium for clients.
