Many factors determine insurance rates
Published Friday August 15th, 2008
High-risk areas don't necessarily mean high insurance rates
Living in a higher risk area doesn't have to mean sky-high auto insurance rates.
The province's current 11-zone territory for assessing levels of auto insurance risk is expected to see about 114,000 drivers face an increase in premiums, while another 266,000 will see decreases based on their location, in a "revenue neutral" change that won't see anymore premiums collected overall.
Moncton, Saint John and the Acadian Peninsula are the three areas deemed to have the greatest risk factors and as such are expected to be impacted with the greatest premium increases -- up to a maximum of 10 per cent. Overall, however, the changes to the province's insurance rates come down to a lot more than a driver's location.
"If you are a good driver and you have no moving violations over a number of years, then you're deemed obviously to be a much better risk by insurance companies than somebody who has moving violations and claims," says Bill Adams, acting vice-president for Atlantic Canada for the Insurance Bureau of Canada.
Adams says the driver's territory is just one of many factors included. Also playing an important role is the vehicle type and how much it typically costs to repair, how the car is used, experience, primary and secondary drivers and driving record. Adams says all factors are weighed in a complex formula to determine risk, with the person's territory only being one part of the final equation.
Although the insurance industry has said those in the province's most high risk areas could see increases of up to 10 per cent in their insurance, the situation may not be quite so financially taxing for the majority of Metro drivers.
"I didn't see any big increases in premiums," says Roland Gallant, a Southeastern Mutual Insurance company agent who works in Moncton. "We made our changes in January and we looked at our premiums and there wasn't a whole lot of difference from what I had last year.
"As far as we're concerned, we don't see our prices changing any in the next year or so, unless something happens drastically to the industry, we don't see that changing."
With more than 60 insurance agents providing their services in New Brunswick, Gallant recommends shopping around for different quotes -- which are usually a phone call or click away -- to get not only the best price, but the best overall company.
"It's great to get a good price, but the service might not be there. You want the company to be there when an accident happens. You can get the bottom-line price, but you may be getting the bottom line of service," he says. "If I have a price of $500 and another company has a price of $200, it kind of begs the question, 'What am I not getting for the $200 price?'"
Along with doing your best to have a spotless driving record and shopping for good prices, the IBC recommends a number of things to ensure lower rates, such as increasing your deductible.
"What amount each person chooses is up to them and what they are comfortable paying for if they happen to need to make a claim -- the higher the deductible, typically the lower premium," he says.
The IBC also mentions considering dropping collision coverage on an older car, installing an approved theft deterrent system in your vehicle and packaging home and auto insurance with the same company, all of which can help insurance rates go down despite being in a high risk area.
The average auto insurance claim is New Brunswick for 2008 is currently $765, which was a drop of 2.04 per cent from the previous year.
New Brunswick's auto insurance rates skyrocketed in 2002 and the issue dominated the 2003 provincial election and led the former Conservative government to introduce several reforms.
Amongst the changes was a $2,500 cap on claim amounts for soft-tissue injuries (most commonly whiplash) introduced in 2003 and a First Change premium discount implemented in 2005, which offered new drivers with a clean driving record the opportunity to pay rates comparable to those paid by experienced drivers with clean records.
Differing rates based on age and gender were also abolished in the reform process.
Lisa Ferguson, spokeswoman for the New Brunswick Insurance Board, says the province has been seeing significant decreases in auto insurance rates since the reforms and she doesn't expect the new territorial system will change that.
"The New Brunswick Insurance Board has only been in place since 2004, but what I can say is that the rates have dropped over 40 per cent since the reforms. I think that's a pretty significant number, even if you don't go back year by year," she says. "I think that drives the point home . . . basically we're among the lowest auto rates in the country right now."
Data from IBC shows that as of year end 2007, New Brunswick has the fourth cheapest auto insurance rates of any provinces in the country.
Ferguson adds that reform changes have saved New Brunswickers more than $600-million in insurance payments in the past several years.
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