Luxury supercars worth more than $150,000 will soon have to get private insurance and their owners will pay twice their current premiums to ICBC in the meantime.
Transportation Minister Todd Stone made the announcement Wednesday at the same time the public auto insurer released a forecast indicating basic auto insurance premiums might have to climb as much as 42 per cent over five years because of skyrocketing claims costs.
According to Stone, the move will ensure that "the broader rate payer is not subsidizing high-end cars.”
Luxury cars like Ferraris and Lamborghinis are six times more costly to fix.
There are more than 3,000 high-end luxury cars insured in B.C., a number that has shot up 30 per cent over the past three years.
Stone noted the average car in B.C. is worth only $15,000 – 10 times less than the new luxury car cutoff – but pays a similar basic insurance rate.
Stone admitted that neither the changes to luxury car coverage nor the B.C. government’s pledge to not take a dividend from ICBC over the next three years would do much to rein in the upward pressure on ICBC insurance premiums.
Forecasted increases to ICBC's basic rates were also disclosed today in response to a B.C. Utilities Commission request for more information before approving a 4.9 per cent basic rate increase this year.
Under the province's rate-smoothing legislation, each year's change in basic insurance rates can't be more than 1.5 per cent different from the previous year.
The ICBC forecast shows basic rates are predicted to increase 6.4 per cent in 2017, 7.9 per cent in 2018, 9.4 per cent in 2019 and 7.9 per cent in 2020 – numbers that compound to 42 per cent when this year's 4.9 per cent hike is included.
Stone called that an extreme sce
nario and ICBC had opposed the release, calling the numbers hypothetical and "potentially misleading."
ICBC also released more optimistic rate increase scenarios that level off at four per cent annually in the next four years or even shrink down to one or two per cent per year. Those scenarios assume a decrease in fraudulent claims, distracted driving and rosier investment returns.
Adrian Dix, the NDP critic on ICBC, dismissed Stone's announcement on luxury car insurance as a "tactic" to deflect attention from the projected rate hikes.
"This is them being caught red-handed with their failed rate policy and trying to find a distraction," he said.
Dix said ICBC would be on much better financial footing and drivers wouldn't be facing big premium increases had the provincial government not taken $1.2 billion worth of dividends out of ICBC's optional insurance business for general revenue over the last several years.
"The government has scooped money out of ICBC," Dix said. "What we're seeing are the consequences of Christy Clark treating ICBC as a bank machine. And it's drivers who are going to pay."
As for luxury insurance reform, Dix said the government could have passed that months ago if it was a serious priority, adding that luxury car repair costs are a minor contributor to ICBC expenses compared to the soaring costs of bodily injury claims.
He also noted that making supercar owners get private insurance won't prevent ICBC from picking up their repair bills if another ICBC-insured motorist is at fault in a crash.
Exempted from the new private insurance requirement are pickup trucks, RVs, collector cars and limousines.
– with files from Jeff Nagel
2011 video of police impounding supercars racing into White Rock
By the numbers
$13,000 – Average repair cost when a high-end luxury car crashes
$2,500 – Average repair cost for a regular vehicle
$38,000 – Cost to repair a 2015 Bentley Flying Spur W12 with damaged fender, grille, headlight and intercooler.
$1,000 – Same basic insurance premium for both the Bentley and a typical car until now.
ICBC's highest repair bills this year
$93,574 to fix a 2015 McLaren 650S valued at $405,000
$88,481 to fix a 2011 Ferrari 458 Italia valued at $300,000
$78,999 to fix a 2016 Maserati Gran Turismo valued at $215,000
$76,796 to fix a 2015 Mercedes-Benz CLS63 AMG valued at $120,952
$76,617 to fix a 2015 Porsche 911 valued at $158,785
$76,474 to fix a 2011 Rolls Royce Phantom valued at $246,500