Pandemic premiums prompt sticker shock
Drivers who reinsure their vehicles after taking them out of storage face rate hikes
If you’re planning to dust off your Honda Civic after putting it in storage, remember that ICBC is operating under a new rate design that treats drivers very differently from each other.
Surrey resident Reden Gangis saved about $240 by cancelling the policy on his 2007 Ford Escape for two months. But when he reinsured, his annual insurance cost went up by $230, to nearly $2,000.
“I was expecting a lower premium after the lockdown,” he said.
If the policy you cancelled to put your car in storage was purchased after Sept. 1, 2019, you shouldn’t notice a difference, but his policy was purchased under the previous
Insurance Corp. of British Columbia rate design.
“I stored my car when I was off work due to the pandemic to save some money,” said one commentator on social media.
“When I reinsured, the rate went up. I think I would have been better off if I hadn’t stored my car.”
He wondered why drivers haven’t felt the benefit of fewer claims being made during the lockdown.
When Vancouver resident Katherine Brodsky put her car into storage a few months ago, she cancelled the business use policy that she had recently transferred to a new vehicle and insured the car for storage to save money due to the COVID-19 lockdown.
Upon reinsuring to drive, she opted for pleasure use only, which she assumed would be cheaper. It wasn’t.
Her pleasure use policy, with collision and comprehensive, was quoted at nearly $3,000 a year, just $33 less than the business use policy she had cancelled months earlier.
“If I’m insuring the same vehicle, same everything, but going from business to pleasure, the premium should have gone down,” she said.
When COVID-19 disrupted the working lives of many British Columbians, ICBC waived cancellation fees and plating fees to give affected drivers a chance to save a few bucks while they were working at home, or not working at all.
In the first seven weeks of lockdown, more than 100,000 policies were cancelled. More than 57,000 policies were downgraded to pleasure use only from commuter use.
More than 47,000 storage policies were purchased, about three times as many as the same period last year.
When traffic dropped, claim costs went down, too, by about 47 per cent or $158 million, according to ICBC. Unfortunately, the provincial insurer lost $283 million in paid premiums.
Of more immediate concern to drivers who want to reinsure is the dramatic difference between ICBC’s old rate design and the new regime for some drivers.
Policies purchased before Sept. 1 last year could change quite a bit upon renewal.
You can use the corporation’s Education Tool to get a rough estimate of the policy costs for different kinds of drivers. We gave it a try. A driver with 10 years of experience, a car without autonomous braking and no at-fault accidents will pay $1,350 a year for a basic policy before optional insurance is added on.
Third-party liability, collision and comprehensive coverage could be as little as $450 for some drivers or more than $1,700, as it was for Brodsky.
A driver with three years of experience and one at-fault accident will pay $3,000 before optional coverage. Add one more accident and that premium shoots up to $5,400 a year, or $450 a month.
Inexperienced drivers are considered 3.5 times more likely to get into an accident.
A driver with 35 years of experience, autonomous brakes and clean driving record could pay as little as $900 for basic insurance.
If you’re less than 44 days from your next renewal date you can use ICBC’s online estimate tool to get a more accurate glimpse of your own policy costs.
It takes into account all kinds of information to define your risk profile, including your experience, accident history, where you live and how you use your vehicle, what kind of car or truck you drive, and who else might drive it.
The other listed driver’s risk profile — whether it’s your spouse, your aging mom or your teenage son — helps determine your premium.