Alberta State Auto Insurance Rates Drop By 5%

Drivers in Alberta State see the premiums for their basic auto insurance to be reduced by 5% through an announcement on Wednesday by Automobile Insurance Rate Board. This Board sets the annual rate for insurance premiums. The chairman of the board attributed the rate drop cut in June which restored a controversial cap on payout for soft tissue injuries.

The $4,000 cap was first introduced in 2004 and then in turn overturned a court challenge in February 2008. But this cap has now been extended to $4,505 implementing following Court rule on June 12. This is a very balancing act which gave an increase last year with the cap being off and with cap back on the rates has been decreased.

But with this effect the insurance companies rates have gone up which is a difficult decision. The drop in premiums have been decreased by $30 which is around 60% of the cost of the insurance

The insurance industry asked for a 6.4 per cent increase in premiums to the submission board. But was disappointed when the board decided to cut them by five per cent.

The decision of the rates shouldn’t have a great impact on the prices the consumers pay for car insurance as the companies need to stay competitive. A company would not like to go too far out of the balance because it will not attract the market share they like to have.