British Columbia to stop insuring luxury cars

Published: November 26, 2016

Updated: July 24, 2018

Author: Luke Jones



In an attempt to lower auto insurance premiums and take the financial burden from taxpayers, British Columbia has said it will now longer give insurance for high-end luxury vehicles. The Insurance Corporation of British Columbia (ICBC) says the cut off will be $150,000 value of cars.

The ICBC says this is “so that the broader ratepayer is not subsidizing these cars.” Minister of Transportation and Infrastructure Todd Stone says customers with these vehicles will have to go to the private insurance market in B.C.

Because of the public auto insurance market operated by the ICBC, all customers and taxpayers pick up a percentage of the industry. In other words, taxpayers are helping to pick up the bill for luxury cars that are more expensive to insure and to fix in the event of collisions. The luxury car market is growing in British Columbia and has increased 30% in the last three years. The Ministry of Transportation and Infrastructure points out there are now 3,000 high-end cars insured in the province in 2016.

“Government is acting now to address the rising costs to repair these cars and to eliminate any pressures they cause on basic rates,” the ministry said.

Of course, drivers will still be required to carry basic levels of protections, but this will now be provided privately and not through the Insurance Corporation of British Columbia. The process to move luxury car insurance out of the ICBC is now underway. In the meantime, steps have been taken for owners of such cars to pay more than double what they usually do for premiums. The ministry explained why this is the case:

“Right now, whether a person drives a $15,000 Honda Civic or a $300,000 Ferrari – their basic insurance premiums are similar,” Stone explained. “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. 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 – 10 times less than the growing number of luxury high-end cars on the road. 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.

The B.C. government says that this change is reserved for private passenger cars only and does not count for commercial trucks, pick-up trucks, collector cars or limousines, the ministry reported. The new rule also will not apply to RVs.

ICBC is also making the following reforms:

  • 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; and
  • 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.

“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,” the release said.