Romanov Report 35 - Mar 14, 2006

Answer: They're both expensive, and unnecessary.

A Gap In Your Insurance

Many drivers have been forced to pay higher insurance rates "unnecessarily" because of a so-called "GAP" in their insurance history.

I've Heard

I've heard of drivers paying higher rates because of a gap in their insurance history, but the reasons given are scandalous.

Some of the reasons I've heard are:

1) The driver temporarily moved out of Canada, creating a "gap" of insurance, and when they moved back, they were rated as a "new" driver.

2) Other drivers got a rate increase because they canceled their auto policy when they decided to take the subway to work, causing a gap. They suffered higher rates when they decided to resume their car insurance.

3) Drivers who had a gap because they didn't own a vehicle for a while, also had their rates increase.

None of these are valid reasons for having your insurance rate increase because of a gap in your history.

Only 4 Ways A "Gap" Can Cause A Rate Increase

Definition of an "insurance gap": Most insurance companies define a gap as being without insurance for more than three months.

There are ONLY 4 situations in which an insurance company can increase your rate due to a gap in insurance history:

1) You had your driver's licence suspended as a result of an offence involving the operation of an automobile.

2) You had a car accident or traffic conviction which would have resulted in a rate increase. To avoid the increase, you did not inform your insurance company of the accident or conviction, so you were cancelled.

3) The gap was a result of an insurance company canceling your policy for non-payment of premium.

4) While driving without insurance during the gap, you were convicted of doing so.

Fight It

If you're paying a higher rate because of a "Gap" in your insurance history and the reason you've been given is "NOT" one of the 4 ways that a gap can cause your insurance rate to increase, go back to your insurance rep and get him to adjust your premium back to a lower rate.

If your insurance rep will not decrease your rate, ask them to put "in writing" the reason you're being penalized with a higher rate because of this "gap" in your insurance. Then take this letter, along with a copy of this Romanov Report, to the Financial Services Commission of Ontario (FSCO), or the governing body of the insurance industry in your province. They will act to to resolve this for you. If that fails, contact me through the "Contact Us" section of www.InsuranceHotline.com.

Protecting Yourself

If you cancel your insurance policy, or get cancelled, ask a friend, co-worker or relative to list you as a driver on their policy. This may cost them some extra money, so be prepared to pay them for it. But it's really worth it in the end. This way, you have "continuous" insurance and will not be penalized for a gap.

Look at this rate example when you compare a driver with a suspension or cancellation, who did "NOT" keep continuous insurance, to the driver who "DID" keep a continuous insurance history:

Gap of Insurance Rate Comparison

This comparison shows the lowest rate found from 30 top Canadian insurance companies, for a Toronto driver.

BEWARE: An interruption in your "Driver's Licence" ALWAYS affects your rate. A lengthy interruption could cause the Ministry of Transportation to require you to go through the Graduated Licensing Program, forcing you into higher rates as you lose your driver licence history and start over as a new driver.

Hope this information is helpful.

Lee Romanov