How Will an Insurance Claim Affect Your Auto Insurance Rate?

By Lesley Green
A person using their smartphone to document damages to their vehicle.
  • Auto insurance claims don’t always cause a spike in your car insurance rate.
  • Collision coverage and comprehensive coverage are optional.
  • Your degree of fault in a collision plays a role in what will happen to your premium.

Everyone knows your driving record and insurance history factor heavily into the auto insurance premium you pay. But what happens to your premiums if you submit an insurance claim? And does it matter if it’s a claim through your collision coverage because you were involved in an accident, or if it’s a claim through your comprehensive coverage because your car is stolen from your driveway one evening?

Everybody usually assumes they'll see a spike in their rates, and while this is true in certain circumstances, it isn't always the case. There are a variety of times when your premiums will generally go unscathed.

Buyer beware! Both collision coverage and comprehensive coverage are optional. If you've opted not to include either of them on your policy, damages that otherwise might be covered won't be. Collision coverage will help pay for repairs if your car is damaged in an accident, while comprehensive provides coverage for claims that have nothing to do with a collision like fire and theft. Both types of coverage – collision and comprehensive – have a deductible.

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Accidentally speaking...

A past InsuranceHotline.com study found that 8.9% of Ontario drivers admit to having a collision on their record in the last 10 years. On the flip side, that means there are a whole lot of people who: 1) have an accident-free driving history; or 2) have an accident in their history that insurers no longer care about. No matter how you look at it, accidents happen, and if you don’t have first-hand (or recent) knowledge of what the impact is on your rate, you might fear the worst.

What follows, then, is a primer on how insurance claims may or may not affect your car insurance rate.

First up is fault determination. If you're in a collision, you'll either be found fully (100%) at fault for causing it, partially at fault, or fully not at fault. In Ontario, the degree of responsibility is determined by the Fault Determination Rules, which all insurers follow. These are rules that are in place to ensure drivers are treated consistently.

An insurance claim for a not at-fault collision

Let's start with the best possible scenario (if such a thing exists when you're in an accident). If you're involved in a collision, and you're wholly not responsible for causing it (e.g., another vehicle rear-ends you), the resulting insurance claim for the damages caused will not increase your premium. You were at the wrong place at the wrong time, and your premium won't take a hit when it's time to renew or shop around.

An insurance claim for a partially or wholly at-fault collision

When you're found to be at fault for causing a collision, even partially, your premiums will likely increase. Depending on your insurer, your premium could increase a little or a lot. Whether it’s the former or the latter, when your premium increases, it's time to put your rate to the test by shopping around as some insurers are more forgiving than others.

Speaking of forgiveness, there are two notable exceptions when an at-fault collision won't increase your premium:

  • If you’re found to be less than 25% responsible for the collision. When your role in the collision is minimal, insurance companies in Ontario cannot use it against you in determining your rate.
  • If your policy includes an accident forgiveness endorsement. With “accident forgiveness”, your premium will not increase after your first at-fault collision. Not everyone has this endorsement as it can cost up to $100 to purchase. It's also usually only available to primary drivers who have already been collision-free for six years.

About accident forgiveness: The accident forgiveness endorsement is company-specific, meaning that although your current insurer may "forgive" your first at-fault collision in terms of premiums charged, the incident is not forgotten. It will be listed on your driving record and insurance history. The collision will follow you for six years if you decide to switch insurers or if you're in a second accident.

Insurance claims for fire, theft, vandalism, or windshield replacement

Insurance claims for damages unrelated to a collision -- like fire, theft, or vandalism -- are filed through your comprehensive coverage. These insurance claims have nothing to do with your driving abilities and are usually just an unlucky break. As a result, they typically will have no impact on your future premium.

The main caveat here is if you have windshield replacement coverage. Your first claim for a cracked windshield will usually leave your premium intact; however, if you have repeated claims, your insurer may increase your deductible or exclude this coverage altogether. Word to the wise, if you need to submit a windshield replacement claim, you'll want to avoid gravel roads for a while.

Insurance claims don't always increase your rates

Having to submit an insurance claim isn't the end of the world. After all, that's why you have insurance coverage to help offset the financial costs when things wrong. If you're unhappy with how your insurer's rates change after an insurance claim, remember that you have lots of options when you shop around.