By Matt Hands, Ratehub.ca
The Cannabis Act, also known as Bill C-45, came into effect Oct. 17, 2018, which legalized recreational cannabis in Canada. Whatever your feelings towards the act are, whether you consume cannabis or not, here’s how cannabis affects your car insurance.
Prior to legalization there was a lot of research conducted to discover what Canadians really knew about cannabis, including the impact it could have on insurance, the rules around impaired driving, and the effect it has on drivers.
An Insurance Bureau of Canada (IBC) survey showed that 43% of Canadians didn’t know how long they had to wait after consuming cannabis before it was safe to drive. Over half of those polled felt they could drive after an hour. However, most Canadians polled (84%) felt driving high posed a real risk on the road. Stats back up this sentiment, in that they show the effects of cannabis can last for more than 24 hours after use.
Ratehub.ca’s own cannabis survey found that nearly 75% of Canadians thought driving while high should be penalized the same as drunk driving and nearly 70% of those surveyed thought it would affect their car insurance premiums.
All the survey results identified that there was confusion around cannabis and the rules for impaired driving, but Canadians seemed to agree that the act of driving while high should be punishable.
The impact of Bill C-45 is still being determined, even though legalized cannabis has been available since October 2018. It hasn’t stopped Canada from being proactive and taking precautions to preserve road safety.
National Reform on Impaired Driving
In December 2018, two months post-legalization, the Canadian government enacted Bill C-46. This created rules to reduce impaired driving and raised fines accordingly.
The new laws don’t change how much alcohol or THC needs to be in your blood for it to be illegal. The Canadian government upped the penalties for drivers convicted of a DUI. If you refuse to be tested after reasonable suspicion that you are impaired, then there is a $2,000 fine.
Below is a summary chart of the penalties, according to the federal government’s guidelines:
Impaired driving remains illegal. The goal of these new policies aims to reinforce the idea that it’s not worth the risk. Impaired drivers will face serious repercussions, both from a legal perspective and to the price they pay for insurance. But what if you’re not a risk taker, how might legalization affect your auto insurance?
How Cannabis Affects Your Car Insurance
Insurance companies look at factors like age, sex, driving record, and the model of car you drive, just to name a few, when calculating your premium. Let’s first look at how a new risk factor like cannabis could impact your rate.
According to StatsCan, the majority of drug-impaired drivers are male between the ages of 20-24 years old. An insurer may look at this data and decide this population set carries a higher risk. They then raise rates proportionately even for those that don’t consume cannabis. It may not seem fair, but insurance companies are always looking for ways to mitigate risk. Often, those that break the law negatively impact the people who obey it.
Insurance companies also use a geographic regional data as part of their risk calculation. Looking at statistics, Newfoundland and Labrador had the highest rate of drug-impaired driving (22.9 incidents per a population of 100,000). Statistics also show us impaired driving is higher outside of major metropolitan areas. In other words, rural Newfoundland may see a rise in their car insurance rates. For insurers, there is a substantially higher risk in that area of a drug-impaired conviction or accident.
The Colorado Comparison
The only historical comparison on how cannabis affects your car insurance is from Colorado. Since legalizing cannabis at the end of 2012, they have seen a sharp increase in fatal crashes where drivers tested positive for cannabis. In 2013, there were only 47 fatalities, but by 2016 that number jumped 147% to 115, according to a study done by The Denver Post. The Post goes on to say shortly after legalization drivers tested positive in about 10 percent of all fatal crashes. By 2016, it was 20 percent.
But how did this statistical shift affect their auto insurance premiums? In the past 6 years, Colorado’s insurance rates have gone up over 50%. While there are other factors at play, like extreme weather damage, distracted driving, and rising repair costs, know that in every state where recreational marijuana has been legalized, with the exception of Massachusetts, car insurance rates have increased.
When determining their premium, insurers look at risk factors beyond the individual driver’s control. It may feel like you’re fighting a losing battle when shopping for insurance, it’s so important to shop around your car insurance quotes to get the best rate, since each insurer will give different weight to the many factors that make up your premiums.
The Bottom Line
Here’s how cannabis affects your car insurance.
The government of Canada put in stiffer penalties to curb impaired driving. At the same time, they launched a #dontdrivehigh awareness campaign. This encouraged those impaired to coordinate a designated driver ahead of time, call a friend for a ride home, hail a cab, take public transit, or stay the night.
We don’t yet know how insurers in Canada will adjust their premiums to account for legalized cannabis. If history has taught us anything, we’re in for an increase. Whether you consume cannabis or not, it’s always important to compare car insurance from a number of suppliers to limit the impact of rising insurance costs from cannabis’ legalization or otherwise.