All types of car accidents can damage your vehicle, lead to potential injuries, cause property damage, and have serious financial impacts. They can also increase your insurance premiums for many years. However, the amount will vary depending on several factors, including whether your insurance company considers you at fault or not. The other factor is, depending on the severity of the accident. Serious accidents can last up to six years on your driving record.
Safe driving habits can help you avoid insurance claims and other issues. However, drivers involved in accidents need to understand how it affects their car insurance premiums and how to mitigate the effects. Even if you don’t get into an accident, you’ll need liability car insurance. It’s time to learn how your car insurance rates are affected by an accident and what you can do about it. Let’s dive in!
Understanding the effect of accidents on car insurance premiums
A car accident can increase your auto insurance premiums when your policy is renewed. Alongside other parts of a car insurance policy in Canada, the effect will vary depending on various factors, including:
- Who is at fault in the accident.
- Your past driving record.
- The cost of the accident claim.
If your insurance company does not find you to be at fault, your insurance may stay the same. However, the impact can be minimal even if you are in an at-fault accident and haven’t filed an insurance claim in a while. That’s where accident forgiveness coverage can help you. This coverage prevents your premiums from increasing after your first at-fault accident. In the event that your premiums increase, it will come into effect once you renew or change your policy. This is important to note because it gives you time to take measures to prevent a significant increase.
Your insurance can get expensive when you get into multiple common car accidents in three years. That’s because your insurance company will consider you a higher-risk driver. In summary, the following can occur after an accident. Your car insurance rates may remain relatively the same if:
- You have accident forgiveness coverage.
- You are not at fault.
- You have a clean driving record with no traffic violations.
- The accident was minor.
However, your insurance rates could increase if you are at fault based on how your insurer evaluates the situation. Any increase will be effective at your next policy renewal. Depending on the company, it could last anywhere from six up to nine years.
Explaining no-fault insurance
No-fault insurance helps make your car insurance more affordable and simplifies processing a claim following an accident. Having no-fault car insurance coverage means fault will not affect the amount insured drivers collect after an accident. It allows each driver to file a claim and collect insurance from their respective car insurance so long as the accident is covered.
If you get into an accident while having no-fault insurance, you can file a claim with your insurance company. Next, your insurance company will pay the claim according to your policy. You will have to pay the applicable deductible if you’re at fault. However, your insurance company will pay the remaining balance of injury-related costs outlined in your policy. It’s important to keep in mind that your insurer will not pay to repair the other driver’s vehicle or car accident injuries.
Keeping your insurance claim between you and your insurer through the no-fault system simplifies processing a car insurance claim and prevents lengthy lawsuits. In addition, you can get compensated sooner, which reduces the chances of a car insurance rate increase. This is ideal because insurance companies don’t have as much to spend on administration and legal fees.
The difference between no-fault insurance and a no-fault accident
No-fault insurance is often confused with a no-fault accident. Just because you carry no-fault insurance doesn’t mean your insurance provider won’t make a fault determination in the claim and adjust your rates accordingly in the future. Even with no-fault insurance, your car insurance rates can increase after an accident. Most provinces in Canada, including Alberta, British Columbia, New Brunswick, Nova Scotia, Prince Edward Island, and Quebec, have some form of a no-fault insurance system in place. The exact nuances of each system vary.
No-fault insurance and no-fault accidents are different. Even if you have no-fault insurance, your insurance company will not determine fault in the insurance claim and adjust your rates accordingly. To clarify, car insurance companies can still increase your rates after an accident. Canadian provinces, including Alberta, British Columbia, New Brunswick, Nova Scotia, Prince Edward Island and Quebec, offer no-fault insurance. However, the rules vary.
Car insurance and driving record changes
Your driving history has a massive impact on your insurance rates. Any changes to your driving record could alter your car insurance rates. Car insurance companies often don’t have access to your complete driving history. However, they can pull a driving record (abstract) to show any recent driving history events. It goes back three years and can show tickets, accidents, claims, convictions, and completed driver’s education courses. These events can affect your car insurance rates and are taken into account when calculating rates.
One thing you can do to help reduce your premium if it’s impacted by an accident is to complete an approved driving course. In many situations, an approved driving course can result in a premium reduction. Luckily, there is something you can do to reduce your premium after an accident — complete an approved driving course. Education programs can reduce your rates because they show that you are committed to becoming a safer driver on the road.
How claims can impact your car insurance premium
Call your insurance company or broker right away, even if you get into a minor car accident. Your broker and insurance company will guide you through the process of what to do after getting into an accident. One of the main things you should do before an accident happens is to compare car insurance policies, including optional ones. Our guide to collision vs. comprehensive car insurance can help. Let’s discuss the benefits of calling your insurance company after an accident without further ado:
Damage and injuries are not always visible
Getting into a fender bender could cost a few hundred dollars if you’re replacing a bumper. However, when you visit a mechanic, the make and model of your car could cost a couple thousand! Another factor to consider is injuries. That’s why it’s important to file a police report at a collision reporting centre. Otherwise, the other driver can say the accident never happened. Having collision insurance is helpful in this situation.
Your insurance company can help pay for repairs
The claims process can take a while because insurance companies must determine what happened. However, reporting the accident to your insurance company immediately will give you the coverage you need to repair your vehicle instead of waiting until the dispute is settled. It will also allow your insurance company and advisor to advocate for a fair claims settlement. Comprehensive insurance provides coverage for various types of car accidents.
The other party might be uninsured or underinsured
You can’t assume that the other driver has car insurance. Even during common highway accidents, if you don’t report it to your insurance, you might have to pay for your expenses out of pocket. This is especially true during a hit-and-run accident where you’ll need uninsured automobile coverage to avoid paying for everything out of pocket. Leaving the scene of an accident comes with serious legal repercussions.
Calling your insurance company is not the same as filing a claim
Calling your insurance company to report an accident and filing a claim are different. Reporting an accident helps you get coverage if the damage or injuries are significant. This is a valid rule for everything from small bumps to sideswipe car accidents.
Let us give you an example. If you get hit from behind and develop whiplash symptoms a few days later, you need to see a doctor. Then, you find out the small hit damaged your driver-assist technology. You could end up paying much more than you thought. Be observant after an accident to prevent paying out of pocket for unexpected expenses.
Additionally, if the other driver files a claim with your insurance company and you don’t, your insurance company will still find out, and a claim will be opened regardless. Always be honest, even if there appears to be little damage, and a claim isn’t required.
Tips to avoid a car accident raising your insurance rates
If you’re concerned about an accident increasing your car insurance rates, you have the right to be. DUIs and at-fault accidents can increase the cost of car insurance. However, there are ways to avoid paying higher rates or, in other cases, prevent a significant increase. Here are some tips to keep your car insurance low after an accident:
Go to driving school
Insurance companies may raise your rates after an accident, but enrolling in an approved driving course can help. It can benefit you personally and financially, with the latter being the motivating factor. After all, you may qualify for a discount on your car insurance policy if you provide proof that you attended driving school.
The majority of drivers will associate driving school with young or new drivers. The fact is, anyone can attend a driving program, and it may be a wise choice for someone who gets into an accident. It shows your insurance company that you are taking responsibility for your actions and making an effort to avoid another accident. Your insurer may consider this and lower your insurance premium as a result.
Add accident forgiveness coverage to your car insurance policy
Having accident forgiveness coverage is a surefire way to prevent your insurance rates from increasing after an accident. Having this type of coverage on your policy will prevent your insurance company from increasing your premiums after your first at-fault accident. This is stated in the terms and conditions of the policy. When paired with accident benefits coverage, it can provide you with a lot of protection.
While not mandatory, accident forgiveness is an effective way to combat insurance premium increases. Its primary purpose is to keep your driving record clean and to stop your rates from increasing after making an at-fault accident claim. Review your coverage, as the policy may vary depending on your province.
Avoid admitting fault at the scene of the accident
Lastly, you should not admit fault at the scene of a car accident. Doing so can increase your car insurance premium. It’s a general rule of thumb to avoid admitting fault to other drivers or passengers involved in the accident.
At-fault accidents are difficult to determine, so it’s unlikely that someone will say they’re at fault right away. That’s why admitting fault prematurely can be detrimental in the long run. After all, accidents mostly impact the insurance premium of the at-fault driver. The result of admitting fault for an accident that you weren’t responsible for can unnecessarily raise your rates.
Following an accident, adrenaline and emotions run high, and rightfully so! Because of this, you should not admit anything until you take some time to calm down and clear your head. Often, it takes time to understand who’s responsible for the accident fully. After all, it’s difficult to determine even for those involved in the accident. It’s especially difficult to determine fault in a sideswipe accident.
Several factors come into play when determining who’s at fault. The drivers involved, where they were driving, the road conditions, and the speed at which each driver was travelling are all considered. Fault determination rules are not black and white. However, they are helpful for insurance companies and when filing a police report. These rules will determine which driver was at fault and how much they were at fault. In some scenarios, it is deemed a shared-fault accident.
Usually, when determining fault after an accident, your insurance company will use the Fault Determination Rules published in Ontario’s Insurance Act. As outlined in the Financial Services Commission of Ontario, once a policyholder reports a car accident, insurance companies must investigate the circumstances of the accident. From there, insurers must make a decision and determine fault based on Ontario’s accident determination rules.
Get a car insurance quote from BrokerLink
If you’re involved in an accident, it can be very overwhelming. That’s where BrokerLink comes in. Our brokers are insurance experts, and they’re here to help you navigate the claims process.
When it comes to getting the right insurance policy for you, your BrokerLink advisor will take the time to get to know you and understand your needs. Contact us today to get started.
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