How claims and tickets affect your auto insurance
Every insurer has its own nuances to how it treats various factors when determining what rate to charge you, meaning one factor may be very important to one carrier and less important to another carrier. However two factors that are always important for every carrier are your at-fault claims and your convicted tickets.
Why these factors are important
Insurance Policies are there to indemnify you in the event of a loss, meaning that if you ever have a loss the insurer can help get you back to the position you were in before the loss, up to the limits of the policy. On the same token the more likely a person is to have a loss, the more they would pay in premium since there is a higher risk that the insurance company will have to pay out to indemnify them. Two important indicators of a higher risk situation are recent at-fault accidents and tickets. For example if someone has had two or three at-fault accidents in the last year it would not be hard to believe that this person is likely to have another accident soon and would be considered a higher risk. Or if someone has had three speeding tickets in the last year it would not be hard to believe that they are more likely to have an accident and should have to pay a higher premium.
How incidents affect rates
Companies have different ways to charge more when there is an at-fault accident or ticket; some will charge a percentage increase depending on the type of incident, but other companies work out the impact based on complex tables (aka “rate tables“) where it may not be a straightforward percentage change. Some incidents cause more of an increase, for example there’s a difference between a minor conviction (e.g., speeding 10km over the limit) versus a major conviction (e.g., speeding 50km or more over the limit). In some cases if you have too many convictions or at-fault accidents, you may even be disqualified from your company and have to ask your broker to find a carrier who can take on higher risk.
When they won’t affect rates
Tickets will affect your rates for 3 years from the conviction date, and at-fault accidents affect your rates for 6 years for most companies (some companies go as far back as 9 years).
Parking tickets don’t affect you, as the companies will only look at moving violations.
In Ontario there is also a specific situation where an at-fault claim will not affect you, called a “Minor At-Fault Accident”. (Source: https://www.fsco.gov.on.ca/en/auto/brochures/pages/brochure_changes10.aspx)
Insurers can no longer use a minor at-fault accident that occurs on or after June 1, 2016 meeting certain criteria to increase your premiums. The criteria include that no payment has been made by any insurer, that there are no injuries, and that damages to each car and property were less than $2,000 per car and were paid by the at-fault driver. This provision is limited to one minor accident every three years.
For the most part the longer you have been driving claims-free and conviction-free, the better your rates will be. So if you are currently paying a high premium due to recent at-fault accidents and claims, it doesn’t always have to be this way!
How to protect against incidents
The best way to keep accidents and tickets from affecting you is to prevent them from happening in the first place, because your driving habits have a big influence on how likely you are to have an incident. It’s always a good idea to drive carefully, pay attention to the road and other drivers, and try not to get distracted by things like cellphones and other devices.
Of course accidents do happen, and sometimes even the most careful driver can slip up. That’s why it’s a good idea to add coverages like Accident Forgiveness and Minor Conviction Protection to insulate you from these slip ups. The naming of these options may differ depending on carrier, but these coverages do what their names imply:
- In the event of the your first at-fault claim or first minor conviction, your insurance rate will be shielded from an increase.
- Note that these are only applicable to the first at-fault claim or minor conviction, so a second one would then begin to affect rates.
- Also it is only available for minor convictions, and not available for major convictions.
The costs for these protections vary by company, and there are rules such as being claims-free or conviction-free for a number of years before you can qualify, but feel free to call us to discuss your options.