The premiums for the portion of your auto insurance coverage that is mandatory (i.e. Third-Party Liability and Accident Benefits) are not allowed to exceed a pre-determined maximum dollar value, based on your area of residence and your driving experience.
The following is an overview of how your compulsory insurance premiums will be calculated. It is meant simply as a guide. To know for sure how your premiums have been calculated, contact your insurer or broker for more details.
How your compulsory premiums are calculated
Step 1: Your base premium
Your base premium is based on your where you live and how much Third-Party Liability coverage you have or will have on your policy:
| Coverage | In Edmonton is: | In Calgary is: | In the rest of Alberta is: |
| $500,000 | $1881 | $1710 | $1368 |
| $1,000,000 | $1980 | $1800 | $1440 |
| $2,000,000 | $2158 | $1962 | $1570 |
Step 2: Your placement on the grid
Each grid level is assigned a percentage that will be used in the premium calculation formula. It could be either a discount or surcharge, depending on your driving and claims history.
To know where you were initially placed on the premium grid on October 1, 2004, refer to the letter you received from your insurer. If you did not receive one or no longer have it, you can also contact your insurer or insurance broker and ask.
For more information about your placement on the grid, give the Kanetix article "Alberta auto insurance reforms: What is the premium grid and how does it work?" a read. It explains some of the details of how your location on the grid is determined.
Step 3: Assigning surcharges
Surcharges will be applied if you have received traffic convictions (including those considered serious) and criminal code convictions within the last 3 years.
| # of convictions | Criminal (like impaired, criminal negligence) |
Serious (like speeding 50 km/h or more over limit, racing) |
Other (like speeding up to 50 km/h over limit, failing to signal) |
| 1 | 300% | 25% | No surcharge |
| 2 | 450% | 50% | 25% |
| 3 | For each additional criminal conviction, double the preceding %. | 100% | 35% |
| 4 | 200% | 50% | |
| 5 | 400% | 75% | |
| 6 | 800% | 100% | |
| 7 or more | For each additional serious conviction, double the preceding %. | For each additional 'other' conviction, double the preceding %. |
If you have more than one conviction in any of the three groups, then the surcharge percentages are added together to determine the final surcharge. For example, if I have 2 criminal convictions, 1 serious, and 2 that are classified as 'Other' my surcharge percentage would total 500 per cent (ouch!).
Step 4: Calculating your grid premium
Now, with the information from each of the preceding 3 steps, all that's left do is the math.
The following are few examples:
Example 1:A driver:
- from Edmonton
- with $1,000,000 in Liability coverage
- with no at-fault claims
- with 3 years of driving experience
This driver's compulsory premium formula would look like:
| $1980 | X | 85% |
| Base Premium | Grid level % |
Totalling $1683
Example 2:
A driver:
- from Edmonton
- with $1,000,000 in Liability coverage
- with no at-fault claims
- with 5 years of driving experience
- with 2 non-serious speeding convictions
This driver's compulsory premium formula would look like:
| $1980 | X | 75% | X | 125% |
| Base Premium | Grid level % | Conviction surcharge |
Totalling $1856
Example 3:
A driver:
- from Edmonton
- with $1,000,000 in Liability coverage
- with 1 at-fault claim 3 years ago
- with 10 years of driving experience
This driver's compulsory premium formula would look like:
| $1980 | X | 120% |
| Base Premium | Grid level % |
Totalling $2376
Note: there is no conviction surcharge like the earlier example, because they only had 1 non-serious speeding conviction.
Your compulsory insurance premium is not your auto insurance premium
Your grid premium is only part of the total auto insurance premium. The reforms currently impact only the compulsory insurance components of your policy. This means your Third-Party Liability (sometimes called personal liability and property damage or PL/PD) and Accident Benefits coverage (also called Section B).
Components of your auto insurance policy not currently impacted by the current reforms:
- All Perils
- Collision coverage
- Comprehensive/Specified Perils coverage
- Common endorsements like SEF No. 20 - Loss of use, No. 27 - Legal liability for damage to non-owned vehicles, No. 43 - Limited waiver of depreciation, No. 44 - Family Protection Endorsement.
Looking for more information?
The reforms in Alberta are a big deal.
If you're looking for more information then check out:
- the Kanetix article, "Alberta auto insurance reforms: How will you be affected?
- the Kanetix article, "Alberta auto insurance reforms: What is the premium grid and how does it work?"
- the Insurance Bureau of Canada at www.ibc.ca
- the Alberta Government's Auto Insurance site at www.autoinsurance.gov.ab.ca
