Driver Risk Premium and Driver Penalty Point Premium changes explained
Last week, the Insurance Corporation of British Columbia (ICBC) announced changes to how it calculates its Driver Risk Premium and Driver Penalty Point Premium. The changes are significant because they mean some BC drivers could end up having to pay thousands more than they do now.
The changes, which could be implemented as soon as this fall, include increasing Driver Risk Premiums and Driver Penalty Point Premiums. The BC Utilities Commission must first approve the recommendations in order for them to become law.
Clients are often confused by the difference between Driver Risk Premiums and Driver Penalty Point Premiums and motorists may be wondering whether their premiums will be affected by certain infractions on their driving record. This uncertainty means it is more important than ever to challenge any infractions on your record and we highly recommend you hire a lawyer to increase your chances of success.
Why has the government done this?
The BC government has cited public opinion as a motivating factor behind its recommendations to ICBC. It claims a public survey showed 82 percent of nearly 35,000 respondents agreed that drivers who are found to be at fault in crashes should pay higher premiums.
Another reason why the government is seeking to punish drivers may be ICBC’s financial situation. Attorney General David Eby, who is responsible for overseeing the public insurer, labelled ICBC’s finances as a “dumpster fire” and in the 2017/2018 fiscal year, it faced a $1.3 billion loss.
The province has already introduced measures aimed at stemming the flow of money out of ICBC. Last month, it passed legislation to put a cap of $5,500 on claims for minor injuries. It also plans to generate more money by activating red light cameras at a number of intersections in BC. Another significant change is that as of April 2019, your driving record will be used to calculate your autoplan insurance rate. So if you have any violations in your past, expect to pay more.
Increasing Driver Risk Premiums and Driver Penalty Point Premiums is the latest scheme designed to put out the ICBC dumpster fire by generating a new source of revenue.
What is the Driver Risk Premium?
The government has recommended ICBC increase the Driver Risk Premium (DRP), by 20 percent in the first year and then another 20 percent the following year. DRP is an additional fee that gets added to your auto insurance plan if you have been convicted of certain offences.
You will qualify for DRP if you have one or more of the following on your driving record in the last three years:
- Driving-related Criminal Code conviction
- 10-point Motor Vehicle Act conviction
- Excessive speeding ticket
- Roadside prohibition
- Conviction for using an electronic device while driving
Currently, the amount you pay varies from $320 to $24,000 depending on the seriousness of the offence and how many times it appears on your record. A list of the current charges can be found on the ICBC website. Under the new plan, this could mean the minimum you would have to pay in DRPs would go up from $320 to $384 in the first year and $448 the following year.
In the most serious of cases, the maximum could rise to $33,600 after two years.
What is the Driver Penalty Point premium?
The Driver Penalty Point (DPP) premium is another fee that can be added to the amount you pay for insurance and it is separate from the DRP program. Some offences may apply to both the DPP and DRP programs, however, they will be billed only once per year under whichever program results in the higher premium.
ICBC will look at how many penalty points you have accrued within a 12-month span. The start of the assessment period is different for each driver.
If you had four or more points on your driving record during those 12 months, you will have to pay a DPP premium.
The amount you could pay ranges from $175, for four or more penalty points, to $24,000 for 50 or more penalty points. By our calculation, this could increase 40 percent over after years to a minimum of $245 and a maximum of $33,600.
ICBC uses your driving abstract when deciding insurance and other driving-related matters. The period of time covered by the abstract depends on the particular matter it is deciding. For instance, when calculating Driver Penalty Point Premiums, ICBC considers a 12-month period. When determining whether calculating Driver Risk Premiums, they consider a three-year period. Your driving record, which covers your entire driving history, can still be taken into account, however, particularly if you have certain infractions that remain on your record forever.
Problems with the new system
One of the biggest issues with the new system is that the drivers may not know about the higher Driver Risk Premium until long after they have been issued a ticket. The premiums are not included on the ticket so drivers will only be able to tell if they will have to pay extra – and if so how much – until they have to renew their insurance.
This also means they may not be aware of about the hundreds, if not thousands, of dollars in extra fines they would be expected to pay until after the period of time to dispute the ticket has expired.
The government is seeking to reduce the number of traffic disputes that go to court but it will likely find this legislation has the opposite effect since higher fines mean drivers will have more incentive to fight tickets.
Is there a way to avoid Driver Risk Premiums and Driver Penalty Point Premiums?
Failure to pay your Driver Penalty Point Premium or Driver Risk Premium has serious consequences. Not only will 19.5% annual interest be charged, but your insurance will also be suspended. You will also not be permitted to renew your driver’s license, replace a lost license, or take any driver exams from ICBC.
As of next year, your insurance rate will be based on your driving record so it is important ever that you challenge any outstanding infractions if you don’t want to end up paying more. We strongly recommend you hire professional help as it will drastically increase your chances of success and may prevent you from having to pay prohibitive fines.
The best way to avoid paying additional premiums is to hire an experienced British Columbia driving lawyer as soon as you receive a traffic or Motor Vehicle Act ticket.
We can help clean up your driving record and keep your insurance rates down. Call us on 604-608-1200.