Claims experience letter: The key to lowering your insurance premiums

Imagine this: you've been driving safely for years in Canada with no car accidents. With car insurance premiums rising by 9.6% year-over-year in 2024, you decide to switch providers in hopes of finding a better deal. Who wants to pay more for their coverage? But, to your surprise, you're quoted a higher premium because they have no record of your driving history. This is where a claims experience letter comes in handy.

As a safe driver, a letter of experience can be used as a powerful tool to show that you have a low-risk profile. A claims experience letter serves as proof that you have a clean driving record, which can help you transition to a new insurance company and secure lower insurance rates.

We're going to be diving deeper into claims experience letters, how to get one, and different scenarios where providing this document to your insurance provider is recommended. Stick around for more info.

What is a claims experience letter?

Think of a claims experience letter--also known as a car insurance letter, or claims history letter--like your car insurance history report card. Issued by your current or previous insurance provider, this document typically outlines details like:

• How long you've had the car insurance policy.
• The types of coverage you purchased.
• Your insurance claims history (whether you have claims on file or not).
• The name and address of the policyholder.
• The policy number.
• The effective and expiry date of the policy.
• Reasons for any insurance cancellations or non-payments.
• Years of driving experience.
• Whether or not the primary driver has any driving convictions.

Car insurance companies use this information to assess risk before quoting your premiums. A clean driving history means that you are less likely to file a claim, which may qualify you for discounted insurance rates. Given that car insurance premiums are on the rise in Canada, especially in Ontario and Alberta, insurance providers rely heavily on this information to make informed decisions about potential customers.

Why do I need a claims experience letter?

You may need a claims experience letter in more situations than you may think. Here are a few examples when this type of document is useful:

• You've recently moved to a new province or from another country, and your new insurer doesn't have access to your insurance experience.
• If you were not the primary policyholder on your previous insurance policy (for example, if you were one of the secondary drivers listed on another person’s auto insurance policy).
• If the insurance company has identified discrepancies or inconsistent information you provided on your insurance application process, and wants to verify your information.
• If you had a lapse in insurance.
• You are setting up a company car insurance policy for a new business location.

In 2024, insurance companies across Canada experienced a rise in catastrophic claims, with insured losses from natural disasters averaging $2.2 billion annually. These growing risks mean that insurance providers are actively tightening their underwriting processes. A documented letter of experience can help ensure that your premiums reflect your actual risk level, based on your claims history and experience.

Information needed for a letter of experience

If you're requesting a letter of experience from your insurance company, they will typically ask you for the following information:

• Your full name and contact information,
• Policy number(s) associated with your auto insurance, home insurance, or commercial insurance.
• Start date and end date of your policy period.
• Type of insurance coverage you had previously.
• Details of any claims filed, including the date, type of loss, and payout amount.
• Confirmation of any claim-free years.

Why this matters

Why this is important: details to follow:

• Your policy number will help your insurance provider verify and locate your insurance history file.
• Your claims history data is essential in determining your risk level before pricing your coverage.
• Your policy period helps establish how long you have had your home or car insurance.

How to Obtain a Letter of Experience

To request an insurance experience letter, here's what you need to do:

1. Contact your current or previous insurance provider

Contact your insurance company and ask them for a letter of experience. You can request this letter over the phone, online, or in person.

2. Confirm your identity

Provide a copy of your driver's licence and other documents to confirm your identity.

3. Request a physical copy of your letter of experience

Ask your insurance company to provide a physical copy of your letter of experience. This can help you avoid delays with your next insurer.

4. Follow up if needed

Processing times may vary depending on the insurer. If you haven't received your letter of experience in a couple of days, follow up with your provider again. However, we should consider the following challenges:

Potential Challenges

• Incomplete records: If your insurance history is quite long, your insurance company may have difficulties locating complete documents, depending on how the information was filed in the past.
• Delays: If the provider you were previously insured by is no longer in business, you may experience processing delays.

Need help locating your letter of experience? BrokerLink can help guide you through the process!

Benefits of obtaining a letter of experience

Getting a letter of experience offers numerous benefits, including:

• Lower insurance premiums, especially with a clean insurance history.
• Faster policy approvals when switching insurers.
• Peace of mind knowing your insurance history is well documented.
• Credibility when purchasing special insurance coverage.

Common mistakes and how to avoid them

Common mistakes include:

1. Forgetting to request your letter of experience before cancelling your policy

Always request your claims experience letter before switching providers. Closing your account beforehand can lead to delays.

2. Not checking for correct information

Mistakes can be made. Review your letter of experience carefully to ensure the information is accurate.

3. Assuming your new insurer has access to updated records

Not always, especially across provinces. Always request your letter of experience to ensure you are prepared.

The bottom line

Whether you're switching insurers or buying a luxury vehicle, a letter of experience can help insurers price your premiums accurately. If you need help, BrokerLink is here to support you. If you're unsure how to move forward or have questions, we'll walk you through the process to ensure you have the documents you need.

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