If you’ve ever gotten a quote on auto insurance in Alberta, you may have heard the agent or the broker talk about insurance grid rates. If you’re not an insurance professional, the term “grid rate” probably doesn’t mean that much to you. Today we want to provide a short guide to understanding what “grid rates” are, what they do, and what it means for you.
Knowing and understanding what grid rates are can help ensure you’re getting the best possible price on your auto insurance.
What are auto insurance grid rates?
Grid rates are a government regulated maximum price a company can charge for basic insurance. This only applies to third party liability, which is the minimum level of insurance required to drive in Alberta.
How are Auto Insurance Grid rates determined?
When you become a licenced driver in Alberta, you start out at a grid rate of zero (provided you didn’t have any at fault claims when you had a learners permit). At-fault accidents, where there is property damage or bodily injury, will result in your grid rate increasing by five. Every year that you’re accident free, your grade rate goes down by one. The longer you go without an accident, the lower your grid rating, the lower the grid rating, the lower the price.
What is a good auto insurance grid rate?
The best auto insurance grid rate is -15. In order to get grid rated at -15, you must be accident free for 15 years or more.
Subsequently, the worst grid rate is +15, this indicates a minimum of 3 at fault accidents, and likely more. These drivers have the highest rates. See the below chart for reference.
Can I lower my auto insurance grid rate?
Every year you go accident free you’re automatically lowered one level on the grid rate. However, if you’re a brand new driver and you don’t have any at fault accidents, there is one way to lower your grid rate.
If you take an accredited driver’s training program and pass both the in class and road safety portions of the program, you will start your driving career with -2 grid rate. Driver’s training gives you an equivalent of two years driving experience in the eyes of insurance companies. Having that lower grid rating will reduce your premium.
Driver's Training Grid Rating Conditions
While drivers training can lower your premium for a new driver, there are a couple of exceptions that should be noted.
- Only new drivers benefit from driver's training lowered grid rates.
- If you already have an at fault claim, you cannot lower your grid rate by taking driver’s training. If you're a new driver and already have an at fault accident, you won't be able to lower your grid rate.
- The lowered grid rate works as a loan. If you remain accident free for 2 consecutive years after taking driver’s training, you don’t go down to a -4. You would stay at -2 for the first 2 years and then go down every year after that.
- If you have an at fault accident in your first 2 years of driving after taking driver’s training, your grid rate will only go up to 3 instead of 4 or 5 (depending how long you've been driving).
Do grid rates have the best price for auto insurance?
Not exactly. Grid rates do not always have the best price. They are only a maximum price a person can pay for liability insurance. Insurance companies all have their own way of rating risks and creating a premium based on that risk. In many cases, grid rates are higher than what a company is offering.
Insurance agents are bound by law to always provide the lowest possible rate to their client. If the insurance company has a lower rate than the grid, you’ll get that rate. If the grid has a lower rate, you’ll get that rate. You will get the lower of the two rates.
What can increase my auto insurance Premium?
- At fault claims
- License suspensions
- Two or more minor convictions
- Major convictions
- Criminal code convictions
At-Fault Claims
An at-fault accident on your record will increase your grid rate by five for each instance. At-fault accidents will stay on your record for six years.
Licence Suspensions
Having your licence suspended will stagnate your your grid rate for every year of suspension.
Minor Convictions
Minor driving convictions stay on your record for three years. After that time, they no longer impact your insurance prices. Having only one minor conviction will not increase your premiums. 2 or more convictions can increase your premiums by 25% or more. Two minor convictions is similar to getting one major conviction.
Major Convictions
Major convictions stay on your driving record for three years. After that time has passed, they will no longer be considered on an insurance application. A single major conviction will increase your insurance premium, by 25% or more. If you get more than one major conviction in a three year span will increase your premiums significantly, sometimes even double.
Criminal Code Convictions
Criminal code convictions on your driving record remain on your record for four years, rather than three years like other convictions. A criminal code conviction will almost always prevent you from getting insurance with any provider other than the high risk insurance company. A single criminal code conviction will result in a 300% or higher increase in your insurance premiums.
More information about how conviction impact your insurance premiums available here.
Want to check your auto insurance grid rate?
The Alberta Automobile Insurance Rate Board (AIRB) has an online calculator with more great information about insurance premiums and grid rate calculations. Click here for the grid rate calculator.
What Else Can Impact My Auto liability Insurance Premiums?
Other than your grid rate, conviction record, and number of at-fault claims, there are two other factors that can determine your liability premium:
- Where you live in the province
- How much liability you're covered for
Why does it matter where you live?
Living in a major city like Edmonton or Calgary indicates a higher likelihood of having an automobile collision. Living outside of a major city will usually result in lower auto insurance premiums.
How much Liability coverage should you have on your Auto Insurance?
At Armour Insurance, our office minimum for liability coverage is $2 million. For reference, the legal minimum for liability insurance is $200,000. Most Albertan insurance companies require clients to get at least $1million in liability coverage. Since 2018, Alberta has seen a large increase in the number of claims over the $1 million. If you were to only have the legally required minimum, you would be financially responsibly for every dollar after $200,000.
What's the cost difference from $1 million vs. $2 million in liability Coverage?
For an extra million dollars in liability coverage, it's usually about a $10/month difference. Premiums will vary by provider.
Conclusion
Auto insurance in Alberta can be little bit complicated. Between understanding all of the different coverage types of coverage, the intricacies of grid rating, and all of the other factors that go into making an auto insurance premium, it can be difficult to find the best price for the coverage you need. At Armour Insurance, we have a team of insurance experts that are here to help. We make sure that you get the coverage you need for the best possible price. If you want help navigating the market or a free quote on insurance, give us a call today.
