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Alberta Auto Reform

Alberta Auto Rate Reform  

Effective January 1, 2024, the Alberta Insurance Rate Board (AIRB) announced a Ministerial Order that will introduce a rate cap on “good drivers” to replace the rate pause that has been in effect since January 2023. This order will remain in force until indefinitely.

This order is intended to temporarily address the challenges customers face when it comes auto insurance affordability in Alberta.

The province of Alberta has enacted legislative and regulatory changes that introduce Direct Compensation for Property Damage (DCPD). On January 1, 2022, all automobile insurance policies in Alberta will automatically have new DCPD coverage added.  


How are good drivers defined?

Good drivers are defined as those who do not have any of the following at renewal:

  • At-Fault collisons in the past 6 years
  • Criminal code violations in the past 4 years
  • Major infractions (major convictions) in the past 3 years
  • More than 1 minor infraction (minor conviction) in the pat 3 years

Note: Photo radar tickets do not count against eligibility to be considered a Good Driver.

What happens if you have less than 6 years of licensed driving experience (i.e., if the driver has only been licensed for 2 years do they satisfy the no at-fault collisions in the past 6 years criteria since they technically do not have any at-fault collisions in the past 6 years)?

If all other criteria is also met then the driver would be considered a good driver. The defintion of what makes the driver a good driver applies irrespective of the number of years driving experience.

What happens if you are considered a good driver?

An Alberta driver who is considered a good driver will be given a limit on rate increases. The rate increase limit will be tied to the annual Alberta Consumer Price Index (i.e., cost of inflation). The current rate is 3.7%.

How will I know if I am considered a good driver?

Customers who fit the criteria above will be considered as a good driver. Those who are considered a good driver will see it noted on the declaration page of their policy documents.

Would a policyholder qualify as a good driver if I have an At Fault accident that is protected by SEF 39 Accident Forgiveness Endorsement?

No. If a driver has an At-Fault accident within the last 6 years then they do not meet the criteria to be considered a good driver. Their premium will not be capped at 3.7% for 2024.

Will the rate cap amount change each year?

Yes, the rate cap percentage is indexed for inflation and is directly tied to the Alberta CPI (Consumer Price Index). The rate cap is calculated each September for the following calendar year.

Does this mean effective January 1, 2024, all Alberta drivers insured with Pembridge who qualify as a good driver will get the 3.7% rate cap?

No. Customers who meet the criteria to be considered as a good driver will see the 3.7% rate cap go into effect on March 1, 2024, for New Business and April 1, 2024, for Renewals.

However, this rate cap does not apply to new business. So, if a driver is looking to switch insurers, they will be subjected to non-capped rates.

Any changes completed mid-term, such as removing a discount, are also exempt from the good driver cap.

What are some exceptions where the capped limit would not apply for a good driver?

  1. The capped limit will not apply to a customer whose risk profile has materially changed by:
  • Moving to a higher risk rating territory
  • Adding or substituting a vehicle
  • Changes or modifications to their vehicle that changes the risk
  • Adding a new driver with a risk profile that is higher than the Insured
  1. The capped limit also does not apply to new business. It is only applicable for existing customers at renewal.
  2. Drivers with grid based premiums for basic auto insurance (mandatory coverages for bodily injury, property damage,and accident benefits) are also exempt.
    (i.e., DCPD, Collision, Comprehensive, etc will be subjected to the rate cap)
  3. Only applies to Private Passenger Vehicle automobile insurance policies. Motorhomes, ATV, Snowmobiles, Motorcycles, and etc., are excluded.
  4. Rates flowing through from previous already approved rate changes (e.g., Nova rating changes)

What is the difference between the Rate Cap and the Rate Pause?

The rate pause set to expire on December 31, 2023, prohibits the AIRB from making any changes to the rating program that would result in a premium increase to policyholders. The new rate cap will allow the AIRB to approve changes to an insurer’s rating program but ensures that policyholders do not see an increase higher than Alberta’s CPI, as reported each September if they meet the “good driver” definition.

Will a customer be excluded from the good driver rate cap if they make a change that results in the loss of a discount such as multi-vehicle?

The AIRB does not consider any insurer specific discounts as a measure of risk profile therefore a policy holder who is deemed a good driver will be eligible for the rate cap. However, since they lost discount(s), they may see an increase in their renewal premium despite having the rate cap in place.

How will the rate cap affect the My_BRIDGE program?

As mentioned above, the AIRB does not consider insurer specific discounts as a deciding factor in whether the policy holder will be deemed a good driver or not. This means customers could end up seeing a higher premium despite being a good driver. A lot of new business customers who enroll into the My_BRIDGE program would see a reduced discount in the second year.

How does this 3.7% rate cap apply to customers who have already been issued policy renewal documents for 2024?

Renewals that have already been issued into 2024 won’t be re-issued with the 3.7% cap applied to good drivers.

This rate cap limit also does not apply to customers who will be seeing future rate increases that have already been approved and will come into effect sometime in quarter one of 2024.



Direct Compensation for Property Damage Insurance - Frequently Asked Questions

What is DCPD?

DCPD provides an easier, customer-focused approach to automobile insurance claims where you are not at-fault for the damage to your vehicle during an accident. As of January 1, 2022, you will work with your own insurer, not someone else’s, on all claims for vehicle repairs. This upcoming change means that we at Pembridge will have the opportunity to take even better care of our customers if they are involved in an accident. 

DCPD does not change your automobile coverage, only who pays for the damage to your vehicle during an accident.

Is DCPD coverage mandatory?

Yes. As of January 1, 2022, DCPD is a mandatory coverage that will automatically be added to all automobile insurance policies in Alberta.

Do I need to do anything?

Our customers will not have to take any additional steps to have DCPD coverage added to their automobile insurance policy. DCPD coverage will automatically be added to your automobile insurance policy as of January 1, 2022, and the changes will be formally reflected on your policy documents. For existing customers, the changes will be formally reflected on your policy documents sent to you when your policy renews in 2022.  

Will DCPD apply to an accident in another province?

Other jurisdictions across Canada have enacted similar DCPD legislation for vehicle damage coverage. If you are involved in an accident in another province, our customers should contact us. Your trusted claims advisor will provide you with further information and direction.

What if I’m at-fault in an accident?

DCPD coverage only applies to not at-fault accidents. After an accident, regardless of fault, you will only deal with your own insurance company during the claims process for vehicle damages. Collision coverage will remain optional to purchase. You still need to purchase collision coverage if you would like to be covered when you are at-fault for the damage to your vehicle during an accident.

If you are involved in an accident where you are considered partially at-fault, then the vehicle damage coverage will be split between DCPD coverage and your collision coverage, if you purchased collision coverage on your policy.  

Are all not-at-fault accidents covered under DCPD?

No. While DCPD is meant to provide coverage in most instances where you are not at-fault in an accident, DCPD does not apply to all not-at-fault situations. For example, hit-and-runs are not covered under DCPD.  Instead, an incident like this would be covered through the optional collision and comprehensive coverages on your policy. If you are involved in an accident, you can contact your trusted claims advisor for further information and direction.

Will I still need Third Party Liability coverage on my vehicle?

Yes, Third-Party Liability coverage continues to be mandatory coverage required on your automobile insurance policy. Third Party Liability coverage will continue to provide coverage for: 

  1. Bodily injury
  2. Property damage – Tort (damage to other property, such as a fence or a traffic sign).

How will "fault" be determined?

At-fault motor vehicle accidents will be determined using the DCPD Fault Determination Rules. For unique or complex situations that do not fall under these accident scenarios, the ordinary rules of the road will apply, as they have in the past.

Under DCPD, who will pay rental costs if I can’t use my vehicle?

DCPD coverage will provide coverage for your rental costs, known as ‘Loss of Use’ coverage, in situations where you are not at-fault for the accident. You can also purchase additional Loss of Use coverage that will cover your rental costs in situations where you are at-fault for an accident. Speak to your Broker to see if this is right for you.

Is there a deductible with DCPD coverage?

The standard DCPD coverage is offered without a deductible. Pembridge also offers our customers deductible options to help lower their premiums, should they choose. To find out more and to discuss which options may best fit your needs, please contact your Broker.

How will DCPD affect my rates?

DCPD is meant to better align insurance premiums with the costs associated with repairs for a vehicle when involved in a motor vehicle accident. This means that, typically, owners of less expensive vehicles that cost less to repair will pay less for their insurance. Similarly, owners of more expensive vehicles that cost more to repair may pay more. It’s a fairer system for everyone. Please contact your Broker to find out more about your specific situation.

Does DCPD make it easier for me to report a claim?

With DCPD, you only need to work with your own insurance company to help with repairs to your vehicle or contents damage, instead of the insurance company of the person at-fault for the accident. Our experienced team of claims professionals are committed to providing you with fast, efficient, quality service. We’re always here to help answer any questions that you may have throughout the claims process. Learn more about our claims service and how to make a claim here.

Are there other changes reform changes I should be aware of in Alberta?

Yes, the province of Alberta introduced other changes to the automobile insurance system prior to January 1, 2022. Please visit  for more details.

How can I get more information about these changes to automobile insurance in Alberta?

If you have more questions about these changes, please contact your Broker. You can also check out AIRB : Automobile Insurance Rate Board - For Drivers - Direct Compensation for Property Damage ( for more information.