Readers' Insurance Questions And Answers

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At, we receive many great questions from our readers. This month, we'd like to share our top 10 Q & As with you.

Q) My husband was recently involved in a fender-bender. The accident was reported to our insurance company, and they deemed the other party 100 per cent at fault. Our insurance company stated they would cut us a cheque for the cost of repairs. So why is our insurance paying for our repairs when the accident was not my husband's fault?

A) In 1994, Ontario legislation introduced the "no-fault" system. Under the no-fault system, everyone involved in an accident submits a claim to his or her own insurance company. This means that if another person is at fault for an accident, you would still submit your claim to your own insurance company. The no-fault system was introduced to help control court costs when claims are disputed, provide immediate financial assistance for accident victims and stabilize insurance premiums.

Q) My 23-year-old son will no longer be an occasional driver on my car since I've recently bought a new vehicle. We now have two vehicles in our household. I want my son to purchase his own insurance policy on the second vehicle. Do we have to change ownership in order for my son to purchase his own insurance policy, or can he just apply for his own insurance as a principal driver, where I'm still the owner?

A) If you maintain ownership of the second vehicle and your son becomes the principal driver, any accident or claim your son is involved in will follow your driving record. This is because you are the policyholder and the registered owner of the vehicle. The only way your son could obtain his own insurance policy would be to register the vehicle under his own name. By doing so, any accident or claim on the vehicle will follow your son instead of you.

Q) I gave my friend permission to borrow my car while I was out of town. Unfortunately, she was involved in a collision while driving my car. She's not currently listed on my insurance policy. Will my insurance policy still cover the damage?

A) As long as your friend held a valid driver's license and did not break the law while driving, then the accident will be covered just as if you were the one driving the vehicle. However, this accident will be reflected on your driving record and your insurance rates may increase as a result. The lesson: when you lend your car, you effectively lend your car insurance.

Q) I am 82 years old and have been driving since I was 16. Over 60 years of driving, I've never run a red light, never had a speeding ticket and have only been in one car accident (which happened 30 years ago). In my opinion, I consider myself a good driver, so why do I have to consistently take specific tests to continue to hold a driver's license?

A) According to the Aging Driver Mobility Forum (which includes policy makers, occupational therapists, doctors and insurance industry members), drivers between 55 and 70 have the lowest rate of collisions of any age group. However, once people are over the age of 75, the collision rate is similar to that of young, beginning drivers. Ontario is considered to have one of the strictest policies in Canada when it comes to drivers who are 80 years or older. In order to renew your driver's license at the age of 80, the Ministry of Transportation in Ontario requires you to successfully complete a vision and knowledge test, as well as participate in a group education session on driving once every two years.

Q) I just renewed both my car and home insurance policies. Is it best to wait until my renewal comes up next year to shop around, or should I do it now? Also, I'm insured with two different companies for my home and car insurance. Does it make sense to insure my home and car with one company?

A) Notes can vary significantly across insurance companies for the same car and driver, so it's always a good idea to shop around to see if you are overpaying on insurance or not. You have the right to cancel your current policy at any time; however, your insurance company may levy a cancellation fee for breaking a contract mid-term, so be sure to weigh this against any potential savings before making a decision. And, yes, if you insure all of your vehicles and homes with the same company, you will get further discounts, so there are advantages to insuring everything with one company.

Q) How do insurance companies determine the premium I should pay each year?

A) Because each person's insurance situation is different, there's no single answer to this question. However, using statistics and complex formulas, each insurance company usually calculates your premium by using its own claims experience (how much money that company paid out in claims in a given timeframe) and by considering a variety of factors, such as where you live, your age, your driving and claims record, the type of vehicle you drive, how often you drive the vehicle and the amount of coverage you want to purchase.

Q) If I have car insurance can I still be sued if an accident occurs?

A) Yes, you can still be sued whether or not you have car insurance. Your auto insurance policy will cover the damages up to the limits outlined in your policy. Usually the minimum is $1 million dollars' worth of liability. (Although many policyholders opt for up to $2 million dollars' worth of liability.) If there are any costs that go above your policy limits due to a lawsuit, you will be held personally responsible for covering those costs that resulted in damages you caused in the accident.

Q) Back in November 2007, I was involved in an accident where a vehicle rear-ended my car while I had my car stopped at a traffic intersection. My insurance company determined that I was not at fault for the accident, and I did not pay a deductible to repair my vehicle. Recently, I bought a new vehicle and decided to insure this vehicle with a new insurance company. When the new insurance company pulled my insurance background check, it showed that I was found 100 per cent at fault for the November 2007 accident! How can I prove to my new insurance company that I was not at fault for this accident?

A) If you were indeed found not at fault for the November 2007 accident, the onus falls on you to prove to your new insurance company that it was not your fault. To resolve this discrepancy, contact the insurance company you were last insured with at the time of the accident and request a Letter of Experience (LOE). An LOE will identify how long you were insured with the company, identify any accidents or claims you filed with this company, state the fault in each accident and outline your driving record. This letter should be enough to clarify the accident dispute.

Q) How do insurance companies determine who is at fault in car accidents?

A) In Ontario, insurance companies refer to the Fault Determination Rules chart. The Fault Determination Rules contains over 40 different accident situations and explanations on how to assign fault for insurance purposes. These rules can be applied to virtually every possible collision scenario regardless of weather or road conditions, visibility, point of impact or the actions of pedestrians. If there is ever a dispute of who was responsible for the accident, it may be necessary to go to court to resolve the situation.

Q) I obtained a considerably lower insurance rate by using I am considering cancelling my current car insurance policy, but don't know if I can or how much the cancellation fee will be. Help please.

A) We're glad to see that we were able to save you some money. You have the right to cancel your current policy at any given time; however, your insurance company may levy a cancellation fee for breaking the contract mid-term. The best idea is to contact your present insurance company to determine the amount of the cancellation fee. From there, you can make an informed decision if it makes financial sense to either cancel or stay with your present insurance company.

If you have a question about your insurance, please send us an email at [email protected] and we may feature it in an upcoming article.