A Few Insurance Questions and Answers

Everyone has questions about insurance. Here are a few commonly asked questions and a broker's answers in plain English:

1.. When I left Alberta almost five years ago and moved to BC, my insurance rates quadrupled. I went from paying $50/month for $2 million comprehensive to paying $110/month for $1 million basic coverage. What accounts for that increase in premiums?

This depends on whether or not you were able to procure letters from your previous insurers in Alberta showing a claim-free history. ICBC works on a Claims-Rated Scale basis, giving an insured 5% discount on their base rate for every year of safe driving until it levels off at 43% after nine years.
When you initially arrive in BC, you start at Base Rate unless you can bring letters from your previous insurers in the other province(s) showing that you have had no claims. This coverage must be continuous (no gaps in
coverage) and up-to-date (dated to the present), and you can claim a total of 8 years claim-free history to get a 40% discount on your ICBC policy.
Insurers in Alberta may have had a different discount scale, which may have entitled you to a lower discount, as well as the fact that you could go to private insurers and "shop around" for the best rate. If you cannot get the CRS letters of insurance history, you will begin at Base Rate and earn your 5% discount for every year of safe driving from now on.

2.. Coming from Alberta, I know what to do if I'm ever involved in an
accident: I exchange contact information and insurance information with the other party and remain at the scene until the Police can file a report. What do I do here where all insurance is done through ICBC?

If the damage is minor and neither one of you wants to claim, you may settle privately with one another and avoid paying your deductibles and the possibility of an effect on your discount. If, however, the damage is more than $1000, it is required that you report it to the police, whether you stay and wait for the police or if you go home and report by phone. You can then call ICBC and report the accident, which the other party is also required to do. The claims number for ICBC is 1-800-910-4222.

3.. Is it possible for me to save money on my car insurance by shopping around?

You cannot "shop around" for your basic ICBC insurance; in British Columbia it is mandatory that you purchase your basic car insurance with ICBC. This includes $200,000 Third Party Liability, Accident Benefits, Underinsured Motorist Protection, and Hit and Run Protection. All Optional (or Own Damage) coverage may be purchased from ICBC, but it is also available from private insurers. Private insurers may have lower deductibles and offer different packages than ICBC offers, but it’s always a good idea not to assume that private insurance will be cheaper—get the rates for ICBC as well and see how they compare. Often ICBC rates are actually less expensive than some private insurers.

4.. How do I find out exactly what is and is not covered by my insurance?

Your homeowners, condominium unit owners or tenants’ package policy will always have a Declarations Page as its first page, laying out the coverages that are included. Also included is a policy wording, which will lay out in layman’s terms (or what insurers may think are layman’s terms!) exactly what each coverage consists of. Car insurance documents from ICBC show the coverages on the second page. A good rule of thumb for knowing what is and isn’t covered be each type of coverage is to remember that Collision coverage covers the damage that you do to your car (ie: run it into a tree or another car) and Comprehensive coverage covers the damage that you have no control over (ie: a tree falls on it; someone drives into it; or an animal runs out in front of it and is struck). Third Party Liability is for any damage or suffering caused by you to another person and/or their property.

5.. If I'm involved in an accident that I did not cause, will my insurance premiums increase?

An accident that you did not cause will be covered by your Comprehensive insurance, assuming you have purchased it. The deductible ($300 if you have your coverage through ICBC) will apply, but you will not lose your discount for an accident that was not your fault.

6.. Why is the deductible on car insurance so high? Doesn't that just encourage people not to claim?

Yes, that’s exactly the idea! Insurance is intended for catastrophic losses, not minor ones that you can absorb more easily. In the event of a total loss, a $300 deductible for a $15,000 car or a $500 deductible for a $175,000 house is not a large deduction. The more people that claim for small and insignificant losses, the more insurance money has to be paid out for claims, and that reflects on our insurance costs. You will also find that rates for insurance in communities where there is a history of fewer losses will be lower than rates in a high-crime community, which is why ICBC rates car insurance costs according to territory. Insurance in Vancouver is more expensive than car insurance in Victoria because of the fact that there is much more chance of a claim in a higher population, higher density area.

Bob Lane Insurance

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