What is the Facility Association and who is it for?

Having trouble getting auto insurance? Don’t despair, you may have one last resort: insurance from the Facility Association.

Facility Association is an unincorporated non-profit insurance organization that gives drivers access to auto insurance coverage, even if other insurance companies have turned them down.

Drivers who secure car insurance through Facility Association are those who can’t get vehicle insurance through regular car insurance companies due to prior collisions, a poor driving record, a history of insurance policy cancellations, non-payment, or other issues.

Facility Association makes it possible to obtain high-risk auto insurance in Ontario and other provinces, including Alberta, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland, Yukon, Nunavut, and the Northwest Territories.

How does Facility Association insurance work?

Facility Association insurance is available through any licensed insurance professional. The insurance company will handle any claims or other administrative tasks just as they do with any other insurance policy.

The biggest difference between Facility Association insurance and traditional insurance is the cost because drivers are considered high risk. This additional risk makes them more costly for insurance companies to cover; therefore, high-risk drivers pay higher premiums.

Suppose the Facility Association loses money in a given year due to the volume of claims they process. In that case, it can pass on the deficit to regular car insurance companies, resulting in higher premiums for everyone. On the other hand, if Facility Association takes in more money than it needs to cover the claims made during the year, it passes on surplus funds to regular insurance companies, allowing them to keep costs down.

Facility Association also operates a separate Risk-Sharing Pool in New Brunswick, Ontario, Alberta, and Nova Scotia. Risk-Sharing Pools, which only apply to private passenger vehicles, allow insurance companies to insure high-risk individuals who still qualify for traditional car insurance.

Insurance companies expect to lose money on these high-risk drivers, so Facility Association reimburses the insurance company when these drivers make an expensive claim. This system helps insurance providers spread the risk of high-risk drivers who aren’t part of the traditional Facility Association framework.

Why would I need Facility Association insurance?

To qualify for Facility Association insurance, you must first be denied coverage by at least one regular insurance company. You must submit the declination letter from the insurance provider when you apply for facility insurance.

You may be denied standard auto insurance coverage if you:

  • Have a poor driving record. Driving convictions such as speeding tickets, reckless driving, and traffic violations stay on your record for three years. If you accumulate multiple driving convictions, you may be labelled a “high-risk” driver, and your regular insurance company may deny you coverage.
  • Fail to pay your premium. Failure to pay your premium on time, even for one month, may put you in the high-risk category. It’s best to put your premium on a direct withdrawal system at your bank to ensure you don’t miss any payments.
  • Have had multiple collisions. Traffic collisions stay on your file for six years. If you’re determined “at fault” for several collisions within this period, you may fall into the “high-risk” category, and traditional insurance companies may reject you.
  • Are affected by other specific factors. In rare cases, you may need to apply for Facility Association insurance depending on where you drive, the type of vehicle you drive, or how you use your vehicle.

How can I avoid Facility Association insurance?

The best way to avoid buying Facility Association insurance is to keep your driving record clean. Each year that you drive without collisions or convictions helps qualify you for a better rate. If you’ve had no tickets in the past three years or collisions in the past six years, you should be eligible for regular car insurance again.

As mentioned, you also need to pay your insurance premium on time to avoid being denied regular insurance.

If you feel your driving record may not warrant assignment to Facility Association, shop around and try to find an auto insurance company willing to cover you through traditional means. An insurance broker can be invaluable in this process as they have access to many insurance products for which you may be eligible. They can help you find the best car insurance rates and are fully qualified to answer your questions and find the information you need.

You have nothing to lose by shopping around for better car insurance quotes and asking questions. You might save yourself a significant amount of money on your annual auto insurance premium.

Other auto insurance savings tips

  • Increase your deductible amount for both collision and comprehensive if you can afford to.
  • Remove collision and/or comprehensive coverage if your car is older.
  • Exclude drivers who have tickets and collisions on their record from your policy.
  • Purchase a car with a lower insurance rating.

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