Will Changes to Commercial Auto Insurance in Alberta Affect Business Owners?

With 2025 pegged to be the year the Alberta government makes significant changes to auto insurance pricing, how will those changes affect business owners when they renew their commercial auto insurance policies?

In late 2024, reports circulated Alberta would increase its annual rate hike cap to 7.5% for auto insurance premiums on January 1, 2025 (up from the 3.7% cap on rate hikes the governing United Conservative Party introduced in 2024). Furthermore, the government said it will introduce a no-fault claims system (calling it a care-first model) in January 2027 to streamline care and compensation for motorists and passengers injured in auto accidents.

Under the proposed system, auto accident victims may be unable to sue the party responsible for their injuries. Instead, insurers would compensate victims at rates set by the government.

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The Insurance Bureau of Canada (IBC) cited data showing lawsuits and legal fees associated with auto collision claims are soaring. The average cost of a legal settlement in auto insurance claims in Alberta exceeded $100,000 in 2023. IBC said legal costs account for a larger portion of auto insurance premiums in Alberta than anywhere else in Canada.

Highlighting the fact that collision-related lawsuits nearly doubled in Alberta between 2018 and 2022, the provincial government estimates the new system could lead to significant savings of up to $400 per year for the average insurance premium. 

Nevertheless, a 7.5% rate hike to commercial auto insurance premiums this year will likely be a tough pill for business owners to swallow, particularly with the U.S. threat of affixing tariffs to all Canadian imported goods stateside.

Which Drivers Might See a 7.5% Auto Insurance Rate Hike in 2025?

According to the Alberta government, “good drivers’” rate hikes will be capped at 7.5% in 2025 to account for rising costs in personal injury claims and natural disaster-related costs, such as the devastating Jasper wildfire and Calgary hailstorm last year.

The provincial government defines a good driver as those who:

• Have no at-fault accidents in the last six years
• Have no Criminal Code convictions in the last four years (such as impaired driving)
• Have no major traffic convictions in the last three years (such as distracted driving)
• No more than one minor traffic conviction in the previous three years

How to Keep Your Commercial Auto Insurance Premium Low

Many factors influence the cost of auto insurance regardless of the province where you reside, including the mandatory coverages a policy contains, the coverage limits, and any optional coverages a vehicle owner chooses, such as collision or upset insurance and comprehensive insurance. 

Higher repair costs for damaged vehicles, a growing number of auto thefts, and severe weather events are also contributing factors.

There are a few ways business vehicle owners and drivers can help limit rate hikes they may see upon renewal, including:

• Make defensive driving the top priority when behind the wheel and maintain a clean driving record
• Avoid having at-fault collisions
• Steer clear of impaired driving and distracted driving
• Do the speed limit and avoid dangerous driving and excessive speeding convictions
• Choose high deductibles for the coverages you have in your auto policy
• Shop your commercial auto insurance rate annually

Finding the Commercial Auto Insurance Coverage You Need at a Reasonable Rate

When business vehicle owners in Alberta go to renew commercial auto insurance this year, they may see their premiums rise depending on which insurance company underwrites their policies.

That’s why it’s crucial to shop around before renewing commercial auto insurance. Zensurance can help business vehicle owners navigate the market quickly and easily to get the commercial auto coverage they need at the lowest available annual premium.

Fill out our online application for a free quote in less than five minutes and explore your options.

Our knowledgeable insurance experts can get the commercial auto insurance coverage you need from our partner network of over 50 Canadian insurers and customize it to suit your budget.