Under Alberta car insurance laws, minor injuries are subject to a cap for pain and suffering. The government has determined that the highest level of compensation that an injured person can receive for this type of damage is $4,504. An objective third party determines whether a person’s injuries fall into the definition of “minor”, and the cap does not apply to money paid out by the insurance company to replace lost wages or for rehabilitation services for the injured person.
The decision to introduce a cap for pain and suffering was made to avoid situations where a person who had suffered a sprain or a strain was awarded relatively large sums as compensation. When a person with relatively minor injuries is given $20,000 or more, the cost is shared with other car insurance customers in the form of higher premiums.
Insurance companies in the province are subject to a grid that sets the maximum rates they can charge for premiums. Rates are based on the policyholder’s driving record and apply to the mandatory coverage portion of the policy. Insurance companies cannot refuse to provide basic coverage to anyone who applies.
The rules for Alberta car insurance handed down by the provincial government mean that drivers with a poor record are not paying rates that reflect this fact. Residents of this province who have good records are paying more than they have to for their coverage to make up for the fact that insurance companies are not charging higher risk drivers a rate that reflects the true cost of covering them.