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?”
Auto Insurance statistics worth knowing
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.
Filing car insurance claims
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:
When to file a car insurance claim
The following is a list of circumstances in which experts recommend filing a car insurance claim with your insurer:
- You get into a serious car accident that results in significant damage to your vehicle or another person’s vehicle.
- You get into a car accident and someone is injured (either you or another person, such as a pedestrian, passenger, or other driver) as a result of the accident.
- You have reason to suspect insurance fraud following an accident (e.g. something feels off about the information provided by the other driver involved in the collision).
When not to file a car insurance claim
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:
- The cost of the damage incurred (whether to your car or the other person’s car) may only be slightly more than your auto insurance deductible.
- You can afford to pay for the damage out-of-pocket.
- The collision only resulted in very minor damage.
- The damage caused in the collision was your fault and you were the only one involved (e.g. you backed out of the driveway and hit your mailbox).
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.
[phone]
What are the impacts of filing a car insurance claim?
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:
- If you are not at fault for the accident: If you file a claim for an accident that you were not at fault for (e.g. you are rear-ended on a busy road), your insurance rates are unlikely to increase.
- If you are at fault for the accident: If the accident was your fault, then it is more likely your insurer will raise your premium. In some cases with at-fault accident claims, your insurance rate may not change right away. Instead, your insurance company may raise it at renewal time so be sure to review your policy carefully (this might also be a good time to enlist the help of a broker who can shop around on your behalf to ensure you get the best possible rate).
- If your driving record is clean: Having a stellar driving record can also impact how much your insurance rates change after a claim, if at all. A clean driving record is usually one with several consecutive years of claims-free and conviction-free driving. If you fall into this category of driver, your insurance company may not increase your premium, or if they do, it may only be by a small amount.
- If you get into another accident shortly after the first one: If you find yourself in another car accident within a few years of the first one (this length ranges but may be five years), your insurer is likely to raise your premium (whether you are at-fault for the accidents or not).
- If you get into multiple car accidents: If you continue to be involved in car accidents, your insurance company is likely going to increase your rates, and possibly by quite a bit. In fact, if you file a high number of claims due to the at-fault accidents or driving convictions you rack up, you may be deemed a high-risk driver, which could lead to a cancellation of your policy. This could make it very difficult (and certainly much more expensive) to obtain auto insurance in the future.
- If you let someone borrow your vehicle and they get into an accident: You might think that when you lend your vehicle to someone, the one driving would be responsible if they get into an accident. But that is not how car insurance works. Auto insurance follows the car, not the driver, so if your friend gets into an at-fault accident in your vehicle, it could affect your insurance premium, not theirs.
- If your car insurance policy features accident forgiveness insurance: Accident forgiveness is a type of additional coverage that can be added to your auto insurance policy as an endorsement, to protect your driving record and to help prevent your insurance premium from increasing if you have an at-fault accident claim. Coverage varies by province, but if you have this coverage as part of your policy, then an insurer is unlikely to raise your rates even if the accident was your fault.
The dangers of filing too many claims
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.
A step-by-step guide to filing an auto insurance claim with your insurance company
If you find yourself in a situation where you need to file a car insurance claim with your insurance company, follow the steps below:
- Report the incident to the local police (if necessary).
- Get in touch with your car insurance company (ideally, do this as soon as possible following the accident).
- Provide your insurer with as many details as possible (it’s a good idea to take photos and video footage of the scene and to write down important information, such as road conditions and the contact and insurance information of the other drivers involved).
- File a claim and answer a few pertinent questions from your insurance adjuster (an adjuster will be assigned to you when you file your claim).
- Receive a quote for the cost of the vehicle damage and repairs (if applicable).
- Find an auto body shop near you and schedule the necessary repairs (please note that your insurance company may recommend an auto body shop, though you are under no obligation to schedule your repair at that shop).
- Close the claim.
How long does it take to file a car insurance claim?
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.
What causes a car insurance claim to be denied?
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:
- You provided misleading or false information in your claim.
- There was an unauthorized motorist driving the car at the time of the incident.
- You were using your personal vehicle for business purposes at the time the accident occurred.
- You committed an illegal act that led to the accident.
- You have an outstanding balance on your insurance payments (i.e. you are behind on your payments).
- You have not purchased adequate insurance (e.g. you don’t have enough coverage, the right kind of coverage, or your coverage has lapsed).
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.
Contact BrokerLink for more information on filing car insurance claims in Canada
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!
Get an auto insurance quote [phone]
FAQs on car insurance claims
Is it worth filing a car insurance claim with my insurance company over a dent?
The answer is it depends. The factor it largely depends on is the cost of the damage. For example, if the cost to repair the dent in your vehicle is $1,100 and you have a $1,000 deductible on your auto insurance policy, the amount the insurer would potentially cover you for is only $100. At this point, you may be better off paying for the repair yourself rather than having the claim be on your record and potentially increase your rates.
How many car insurance claims can I file annually?
Car insurance experts will tell you that there is no limit to how many claims a policyholder can file each year. Therefore, you can technically file however many claims you want. However, filing too many claims is generally unwise as it can lead to a significant increase in your rates and may even cause you to lose your coverage. If you think you may have filed too many claims in the past year, pay close attention to any policy changes come renewal time, as your insurer is likely to raise your premium and may even add a clause in your policy about the number of claims you can file.
How many auto insurance claims is too many claims?
There is no set number of car insurance claims that is too many. However, given that the more claims you file, the more likely your insurer is to raise your rates, it might be worthwhile to do some basic calculations before deciding whether to file a claim. Such calculations should take into account your policy deductible and the amount of money it will cost to repair the damage. To determine this, contact an auto body shop near you to get a quote or estimate on the cost of the repair. If the damage done is not to your vehicle, but to yourself or another person (i.e. injury), try to find out how much the necessary medical expenses will amount to.
What is an example of a minor claim that may not be worth filing for?
The definition of a minor claim varies from person to person and insurance provider to insurance provider. That said, examples of minor incidents that may not be worth filing a claim over include small dents or scratches or broken side mirrors. Generally speaking, it is more cost-effective to file claims relating to major incidents of damage rather than minor ones, especially if you have a high deductible.
If you have any questions, contact one of our local branches.
