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12 minute read Published on Mar 14, 2023 by BrokerLink Communications
When you buy auto insurance in Canada, what you are paying for is access to financial protection if an incident occurs. This financial protection usually comes after a claim has been filed. An insurance claim is a request made by the policyholder to the insurance company to help them pay for an insured item that they have lost or damaged. In the case of auto insurance, the item being insured is your vehicle (and yourself as the driver of the vehicle). Understanding how claims work is an important part of being a policyholder. Below, the experts at BrokerLink have put together a guide to car insurance claims, which includes an answer to the frequently asked question, “how many car insurance claims can I file per year?”
Before we dive into all things auto insurance claims, let’s first provide some background information on claims in Canada. One statistic worth knowing is that auto insurance claims in Canada amounted to $18 billion in 2019. This means that car insurance providers in the country paid roughly $18 billion to policyholders to cover the damage caused by various kinds of automobile accidents. When you compare these numbers to 1990, the jump is huge. In 1990, it was reported that the amount of money paid by car insurance policies in the form of claims was just $6 billion. Though one reason for the drastic increase could be Canada’s fast-growing population (which means more drivers on the road), this statistic still puts into perspective how prevalent car accident claims are. Given how common insurance claims are for automobiles in Canada, it’s even more important to understand how they work.
Knowing when to file an auto insurance claim is the first step. There are several situations in which filing a claim might be worthwhile. There are also certain scenarios in which filing a claim with your insurance company may not be worthwhile:
The following is a list of circumstances in which experts recommend filing a car insurance claim with your insurer:
Since making a claim is a big decision and one that can have serious repercussions (more on that below), it is something that policyholders should think carefully about. In other words, it may not be wise to file a claim for every little issue. For small accidents or incidents of minor damage, you may be better off not filing a claim. The following is a list of scenarios when you may prefer to hold off on filing a car insurance claim:
Please note that if you get into an automobile accident and are unsure whether to file a claim, contact a broker at BrokerLink. We have a team of auto insurance specialists who can provide expert advice on whether filing a claim might be worthwhile.
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Filing a car insurance claim can impact your insurance in several ways. Namely, depending on the circumstances of the claim and the accident that necessitated it, it could lead to an increase in your insurance premium. If it is your first claim or you were not at fault, your rates may stay the same. However, if you have previously filed several claims or you are liable for the accident, the situation may be different. Ultimately, the damage incurred, the type of claim filed, and the fault determined will all affect the outcome. We dive into how different types of collision-related auto insurance claims can impact your insurance rates below:
As you now know, filing a car insurance claim can have negative consequences in the form of your premium going up (exactly how long it affects car insurance rates varies). The more claims you file, the higher your odds that your insurer will raise your rates. If you file many insurance claims, especially if they are filed over a short period of time, you may even run the risk of having your car insurance policy cancelled. Lots of claims are a red flag to insurance providers as it tells them that you are a riskier driver because you have been involved in so many accidents. Of course, if your insurance company was going to cancel your policy, they would be required to notify you, giving you some time to find new coverage before it expired. However, depending on the number of accidents you were involved in and the claims you filed, you might have trouble finding a new policy. If you are deemed a high-risk driver, some insurance companies may not be willing to offer you a standard policy. Instead, you will have to pay extra (quite a bit extra) for one of their non-standard policies. Overall the best way to avoid becoming a high-risk driver and potentially losing coverage or having your claim rejected is to practice safe and responsible driving habits and avoid filing claims that may not be worth it.
If you find yourself in a situation where you need to file a car insurance claim with your insurance company, follow the steps below:
The process of filing a car insurance claim can be relatively quick. In some cases, it can take as little as 15 minutes, and in most, it will not take more than an hour. It ultimately depends on the severity of the accident, how many questions your adjuster asks, and how much information you can provide to your adjuster. That said, the length of time it takes an insurer to respond to a claim varies. Sometimes it can be a matter of work before you hear from your insurance company, especially in the case of simple claims. However, other times it may take longer. To get a better idea of how long the claims process takes, be sure to ask your insurance agent or broker.
Keep in mind that every time you file a claim, there is no guarantee that it will be accepted by your insurance provider. You must wait until the insurer reviews your claim to know whether it has been approved or denied. You might be surprised to learn that auto insurance claims are not automatically accepted. In fact, an insurance company may have several reasons to deny your claim. If your claim is denied, you will be required to pay for the cost of the damage (e.g. repair bills, legal fees, or medical expenses) entirely out-of-pocket. A few situations in which your insurance provider may deny your car insurance claim are as follows:
Any of the circumstances above may lead to an insurance company denying your auto insurance claim. Even worse, it may also lead them to cancel your policy outright. We dive into a few of these reasons in more detail below:
First up is non-payment. This is one of the most common reasons that a claim is denied and a policy is cancelled. Non-payment is a term for when a policyholder does not make their insurance payments. Skipping even one insurance payment can put your policy in jeopardy. If you notice you are falling behind on your payments or are worried about this happening, contact your insurance provider to see if you can work something out.
Misrepresentation is another reason that a car insurance company may deny your insurance claim. Misrepresentation is when a policyholder provides false information (which includes withholding insurance) to their insurance provider. This usually happens during the application process and may be done under the impression that it can lead to cheaper rates. However, the reality is that misrepresenting yourself to an insurer can have serious, long-term consequences, such as the denial of a claim and the cancellation of your policy. Further, such an incident would go on your insurance record and may make it difficult to obtain new coverage down the road.
Not unlike the principle behind misrepresentation, fraud is another example of a situation in which your insurer might be within their rights to deny your car insurance claim or cancel your policy. Insurance fraud occurs when a policyholder files a fraudulent claim or lies about the circumstances that led to the incident. Fraud is a serious issue in the insurance industry, so you should never lie to your insurance company. Be truthful with them at all times and never file unwarranted or false claims.
If you were committing an illegal act at the time of the accident, such as driving under the influence of drugs or alcohol, speeding, or driving with a suspended driver’s licence, your insurance company is likely to deny your claim.
Finally, most standard car insurance policies in Canada do not cover business usage. Therefore, if you drive your vehicle for business purposes, such as to deliver products to customers or transport materials to and from various locations, you will need to purchase a commercial auto insurance policy. Otherwise, if you get into an accident while using your vehicle for business purposes, your insurer may be able to deny your claim.
If you still have questions about filing an auto insurance claim in Canada, contact BrokerLink today. We have an entire team of auto insurance specialists behind us, any of whom can answer your questions about filing a claim. We can provide expert advice on whether filing a particular claim is worthwhile and can even offer tips on how to navigate the claims-filing process. Get in touch with BrokerLink by phone, email, or in person, or use our online quote tool to receive a complimentary car insurance quote in minutes. We can’t wait to hear from you!
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