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How Long Does an Accident Affect Car Insurance Rates?

Jan 17, 2020 5 minute read

How Long Does an Accident Affect Car Insurance Rates?

In addition to immediate damage to your vehicle and potential injuries, car accidents can also have lasting financial effects. They’ll sometimes increase car insurance premiums, and the increase can last for several years. In short, accidents can increase insurance premiums for up to nine.

Not only does a premium increase raise insurance costs, but multiple accidents can increase the financial burden as their premium increases compound. While avoiding accidents is always the best way to avoid insurance claims (and other) issues, drivers who are in accidents need to know how an accident affects their premiums in Canada and what they might do to mitigate the effects.

If you’ve been in an accident, here’s how your car insurance rates may be affected and what you might be able to do about it.

How Car Accidents Can Affect Insurance Rates

A car accident may result in your car insurance rates going up after the accident. As with many other aspects of car insurance in Canada, however, exactly how your insurance is affected depends on a variety of factors. All of the following may impact whether an accident impacts your car insurance rates:

  • Who is at fault in the accident
  • What your past driving record is like
  • How much the accident claim amounted to

If you’re not at fault, your car insurance rates may remain unchanged. If you are at fault, the premiums might still stay the same if you haven’t filed an insurance claim recently and the amount of this claim is relatively minimal.

In the event that your premiums increase, the increase usually doesn’t go into effect until your policy renews (or you change policies). When it does go into effect, the increase is normally a percent of your current premium and it’s referred to as a “surcharge.” The amount of the surcharge will sometimes decrease slightly with each policy renewal, until it no longer has an impact on your car insurance rates.

Should you be in multiple accidents within three years, the associated premium surcharges will likely stack on each other. This is what can make insurance especially expensive if you’re in more than one accident in a short amount of time.

In summary, after an accident you can probably expect the following to happen:

  • Your car insurance rates may remain the same if you’re not at fault, have a clean driving record or are in only a minor accident
  • Your insurance rates could increase if you’re at fault as the insurer assesses a surcharge
  • Any surcharge you see will probably go into effect at your next policy renewal. Depending on the company, it will last up to nine years
  • Any surcharge you see will probably go into effect at your next policy renewal. Depending on the company, it will last up to nine years

What's No-Fault Insurance?

No-fault insurance is a system that’s designed to make car insurance in Canada more affordable and claims processing after an accident easier. With no-fault car insurance, after an accident, fault has no impact on what insurer drivers collect compensation from. Each driver files a claim and collects (provided that the accident is covered) from their own insurance company.

If you have no-fault insurance and are in an accident, you’ll file a claim with your insurance company and your insurer will pay that claim according to your policy. You’ll have to pay any applicable deductible if you’re at fault, but your insurer will cover the remaining damage to your vehicle and any injury-related costs as your policy stipulates. Your insurer doesn’t have to pay anything to repair other drivers’ vehicles or injuries.

In keeping your claim between you and your insurance company, the no-fault system simplifies processing and reduces the likelihood of a drawn-out lawsuit. This ensures you get compensated more quickly, and it keeps premiums lower because insurers don’t have to spend as much as they otherwise would need to on legal fees.

Importantly, no-fault insurance shouldn’t be confused with a no-fault accident. Just because you carry no-fault insurance doesn’t mean your insurance carrier won’t make a fault determination in the claim and adjust your rates accordingly in the future. Even with no-fault insurance, your car insurance rates can increase after an accident. Most provinces in Canada, including Alberta, British Columbia, New Brunswick, Nova Scotia, Prince Edward Island and Quebec, have some sort of no-fault insurance system in place. The exact nuances of the system can vary slightly among provinces.

As a recap, no-fault insurance is a system that simplifies insurance claims. With this system:

  • You deal with your insurance carrier if you have an accident claim
  • Your insurance carrier provides compensation according to your policy’s coverages
  • You may still be found at fault for an accident
  • Your insurance rates can still increase after an accident

Car Insurance and Changes in Driving Record

Premiums for car insurance in Canada are based partly on your driving record, and any change in your driving record could impact your car insurance rates.

Insurance companies don’t have access to your complete driving history since you first got a permit, but they can (and do) pull a driving record that shows recent events in your driving history. Your driving record generally goes back three years, and it’ll usually show tickets, accidents, claims, convictions, and completed driver’s education courses. Whenever any of these events, including an auto accident, go on your driving record, they can have an effect on your car insurance rates. Most will result in a surcharge that lasts three years.

The one thing you can do if you’re in an accident that causes a premium increase or get a surcharge for some other reason is complete an approved driving course. In most situations, an approved driving course will result in a premium reduction -- and one might help mitigate the effects of an accident or other incident.

To summarize your driving record:

  • A driving record normally shows three years of driving-related incidents
  • Most incidents will result in a three-year surcharge that’s added to your premiums
  • You may be able to reduce premiums by completing an approved driving course

Are you covered? Get your car insurance quote today.

FAQs on Car Accidents and Car Insurance Claims

How long does a claim last on your insurance?

Most car insurance claims will remain on your driving record, and therefore impact your insurance, for three years.

Does a car accident affect your driving record?

A car accident is one of the items that goes on your driving record. Other details on the record include any tickets, convictions, and completed driving courses that have occurred recently. How an accident that’s listed on your driving record affects your car insurance rates depends on the specifics of the accident. An accident will often cause rates to go up, but there are cases where an accident has no meaningful effect on premiums.