Accident Reporting: When Your Insurance Company Needs to Know

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After a minor fender bender, you might think it makes sense to simply pay for the damages out of pocket and avoid the rate increase on your car insurance that will result from reporting a claim. While this might work out perfectly in some cases, it’s important to know that there are potential repercussions to this decision that could come back to trouble you in the future. When should you report an accident to the insurance company? Consider all of the risks before you make a decision.

Your Responsibility for Reporting an Accident

Any accident where the damage to the vehicles is significant must be reported to the police – in Ontario, the total damage amount from both cars is $1000 and in Alberta, the total damage amount is $2000. Check with the police for the specifics for your province - any accident where there is damage to property and any accident where someone is injured will require a police report. And if a police report is completed for the car accident, you must also notify your insurance company.

The police will not report the accident to your insurance company, but in some cases it might be taken out of your hands by the other party. Should the other driver involved choose to report to their auto insurance company, yours will be notified.

What Happens if you do not Report an Accident

If the other driver never contacts their insurance company and neither do you, then you will not see a rate increase as a result of the accident. But simply because a few months have gone by does not mean you are in the clear. While each province may have different laws, in most cases the other driver has up to two years to file a claim against you. That means that should they decide down the line that they want to make a claim for an injury that wasn’t noticed when the accident first happened, they have that right.

It is expected by many insurance companies that you report any accidents to them within seven days of the occurrence. Some may give a longer time period, but they all have a limit. In some cases failure to do this could mean the insurance company will deny the claim. Should you or the other person decide to file a claim down the line, you might find out the insurance company is not going to pay.

Furthermore, if the insurance company finds out about an accident later, even if you paid for the damage out of your own pocket, they can still raise your car insurance rates as a result. Whether or not you filed a claim, an at-fault accident raises the risk of insuring you and can thus be a reason for a rate increase; remember that rate increases do not occur just because you filed a claim, but based on the fact that you were responsible for an accident as well. Even worse, failure to report an accident may be grounds for the insurance company to non-renew you.

Things to Know When Shopping for Car Insurance

When you are shopping for car insurance, it is important to find out what the company’s policies are on reporting accidents and how they will proceed should they find out about an accident after the fact. Remember that insurance companies can determine their own rules for these procedures and also determine how they will rate for someone with an accident.

If you have already had an accident which you did not report but was later reported to the insurance company, you will need to disclose this accident when you shop for a new policy. The good news is that while the current insurance company may have decided to non-renew you as a result of your failure to report the accident, that does not mean that another insurance company won’t take your business and even offer you a good rate for your coverage.

Accident Reporting: The Bottom Line

When you make the decision as to whether or not to report an accident, you need to weigh all of the risks against the benefits. The main benefit of not reporting an accident is that your rates will not go up – but it is clear that there is no guarantee of this. Thus the benefit of not reporting is a risky one at best, and not reporting may wind up costing you more in the long run.

In any case where there is a lot of damage or there are injuries, you should call the police and inform the auto insurance company right away. Injury claims especially have a way of escalating very quickly, even when they appeared minor at the scene. You pay for insurance to protect you from the financial burden of an accident – but failure to follow their reporting guidelines may mean that protection won’t be there for you. In the end, not reporting an accident is most often a risk not worth taking.