Government is moving forward to no longer insure the high-end luxury car rate class (cars worth $150,000 and over) so that the broader ratepayer is not subsidizing these cars. The owners of these cars will have to go to private insurance instead, Minister of Transportation and Infrastructure Todd Stone announced today.

The high-end luxury car market is a growing market, with 3,000 cars insured this past year, a 30% increase compared to three years ago. Government is acting now to address the rising costs to repair these cars and to eliminate any pressures they cause on basic rates.

The government will get to work on the necessary legislative changes to have ICBC no longer insure these high-end luxury cars. This means that in the future, private owners of these cars will have to purchase their insurance through private insurance. Drivers will still be required to carry a certain amount of coverage to protect themselves and other drivers, but it will not be provided through ICBC’s public insurance plan.

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While this work is underway, government will immediately take steps so high-end luxury car owners will pay more than double for their basic insurance and ensure their premiums fully cover all costs of any repairs. These interim changes will be formally implemented as soon as possible.

“Right now, whether a person drives a $15,000 Honda Civic or a $300,000 Ferrari – their basic insurance premiums are similar. If owners of high-end luxury cars can afford a high-priced car, they certainly can afford to pay higher premiums to cover the real cost for their repairs,” said Stone. “This policy needs to be fair for all British Columbian ratepayers, and we want to ensure that the regular everyday driver is not paying for the additional repair costs of these cars through their insurance rate.”

The average private passenger car in B.C. is worth approximately $15,000, which is 10 times less than the growing number of luxury high-end cars on the road (cars worth above $150,000). When these more expensive cars get into a crash, it costs approximately six times more to fix them because they are rare, and they are built using high-end technologies and more expensive materials. However, until now, the owner has paid similar rates for their basic insurance.

Last year, for example, the average repair cost for a high-value luxury car was approximately $13,000, compared to the average repair cost of approximately $2,500 for a typical private vehicle. For example, the cost for parts to repair the fender, grille, headlight and intercooler on a 2015 Bentley Flying Spur W12 was approximately $38,000 alone. While the cost to repair this car is substantially more than the everyday car, the basic insurance rates of about $1,000 per car are about the same.

The new rates will apply to private passenger cars only, and not commercial trucks, pick-up trucks, collector cars or limousines. The new rule also will not apply to RVs.

The B.C. government and ICBC will start working on necessary framework and policy changes immediately.

This measure is in addition to several other measures the government and ICBC have already taken, to help address rising cost pressures, including the following:

• Rate smoothing model – which restricts basic rate increases to plus/minus 1.5% of the prior rate adjustment.
• Tougher enforcement for distracted drivers – with significantly higher fines, more penalty points, higher levels of enforcement and more education.
• Mitigating fraudulent claims – working to combat fraud and exaggerated ICBC claims through more public education and better fraud analytics tools, which will target fraudulent claims and ultimately lower ICBC rates for all drivers.

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This is one of a number of actions that government and ICBC will be rolling out over the coming weeks and months to continue to address cost pressures on rates.

A backgrounder follows.