Claim Penalty

An Accident Claim Penalty Is Just That- A Penalty Against You.

Your insurance company in most cases will assess a penalty against you in the form of higher insurance premiums if you report an accident and / or a claim for repair of your vehicle to them.

Please take time to look over the information on this page- it can save you hundreds or thousands of dollars.

Read the article below and then click on the portion that will provide you with the best renewal rates after you report a claim. If your company is not on the list, it means their renewal premium rate for you is likely much higher. Accident forgiveness options are not included. The questions may take a few minutes of your time. Many times your renewal will be from 50-400% higher, so you may want to not report the claim, but rather use cash or the RIFCO autobody consumer credit program to pay for the repair.

Your collision repair shop manager can explain the options..

Here's what you need to know when deciding whether to report your insurance claim, or pay it yourself.

Your Insurance Rate: A driver with an accident can see their insurance rate jump from $1,500 to over $5,000, and remain high for 6 years.

Rate Differences: Insurance companies target their rates to certain driving profiles. To see the vast difference between insurance rates for a driver with an accident, click here

After an accident: You need to find out what your rate increase will be, and based on your new rate, decide how to proceed.

Note: Your insurance rate does not increase in proportion to the amount of damage, regardless of whether you have a fender bender or have written off a Bentley. Single vehicle accident, are easier when trying to protect yourself from an insurance rate increase.

Calculate Your Rate: tells you which insurance company has the best rate for you, given your current driving profile. Click on the link below and enter your current driving profile, including your accident.

Lowest Rate: This will give you the three lowest rates from the top 30 insurance companies in Canada. Take the lowest rate and multiply it by 6 to get an idea of how much this accident will cost you in insurance premium over the next 6 years.

For Example: Let's say the cost to repair your car is $10,000.

Your Company: If you report the accident to your insurance company and find out that your rate will increase by $3,000 annually over the next 6 years, then this accident would actually cost you $18,000. To find out what your increase would be ask your broker.

New Company: By searching for the lowest insurance rate you may find a rate that represents only a $1,000 annual increase, over the next 6 years, resulting in a $6,000 insurance increase.

In this case, it may be worth claiming the accident on your insurance with your present company, then switching to the new company upon renewal of your policy.

Repeat Process: Every year for the next 6 years your rate should decrease. If you search for the insurance company with the lowest rate every year, you should find one as your accident gets "older". Then if you wish, switch to that company.Paying Your Own Claim: If you choose to pay your own claim, particularly in a single vehicle accident, you protect your insurance rate from an increase. If you've had a prior accident in the past 6 years, or tickets in the past 3 years, the combination can cause your insurance company to cancel your policy.

Repair Shops: It's your choice where to have your car repaired. Some insurance companies have preferred shops, but the call is ultimately yours.

Your Record: If you've had a prior accident in the past 6 years, or tickets in the past 3 years, the combination can cause your insurance company to cancel your policy. You should check with your broker before making any claim to see what cancellation conditions your insurance policy has.

Driver's Abstract: The driver's abstract tells you how many tickets you have on your record. Insurance companies will increase your rate for 3 years for a ticket.

Here are the various tickets insurance companies charge for:

Here's how to order your driver's abstract:

Auto History Claims Report: It's also important to know what your claims history is with the insurance company. This report allows you to see what has been reported on your file since you received your drivers licence. It's free. To order it, click here:

Fault Determination Rules: Insurance companies use these rules to determine who's at fault in an accident. Even if you're considered to be partially at-fault, it carries the same weight as being completely at-fault. To view these rules, click on the link below:

Insurance Policy Wordings: All insurance policies are identical, word for word. The only difference is what the insurance company charges. To view the insurance policy, click on the link below:

As a general rule, you should always get two opinions about whether your claim is covered, or whether you've been correctly deemed "at-fault" or "partially at-fault".

Insurance Experts To Turn To: The General insurance Ombudservice (GIO) is an organization set up to mediate between insurance companies and drivers with respect to the "Fault Determination Rules". In other words, if you have a dispute with your insurance company that you can't resolve, GIO will help you out. They also mediate for home and life insurance issues, and much more.

Their contact information is as follows: Telephone Number: 1 877 225-0446 Website:

Reporting Your Accident To The Police: You need to report your accident to the police when there has been a person injured or damage to any public or private property, such as guard rails, lamp posts, traffic signals or someone's lawn.

Note: The police do not report your accident to the insurance companies.

Reporting Your Accident To The Collision Reporting Centre: The collision reporting centre will report your accident to the insurance company, unless you ask them not to do so.

Reporting Your Accident to Your Insurance Company: You are required to report your accident to the insurance company when the estimated damage exceeds $1,000 for both cars. This is the guideline set by insurance companies, but isn't always practiced by drivers.

Risk Of NOT Reporting Your Accident To Your Insurance Company: If both drivers agree to settle the claim between them, the at-fault or partially at-fault driver, or drivers, can avoid rate hikes. The only risk is in paying your own claim when the other driver decides to go through his insurance company after the fact. Then your company will be notified and the accident will count against your insurance record.

Driver With No Insurance: If your car was hit by an uninsured driver, you will pay a $300 deductible to your insurance company, but your insurance rate doesn't increase.

Hit And Run Driver: If the driver who hit your car is unidentified, you will pay your collision deductible to your insurance company, but your insurance rate doesn't increase.

Determining Fault For Your Accident: The police determine whether there has been a violation of the law. Your insurance company determines fault, which dictates whether or not your insurance rate will increase. The police could determine that the accident was not your fault, yet your insurance company can still deem you to be at-fault.

Star Rating: Your "star rating" indicates how many years you've been driving accident-free. For example, a 5-star rating indicates to the insurance company that you've been driving accident-free for 5 years.

Note: A star rating does not reflect better insurance rates, between companies.

Accident Forgiveness: Beware of this term. It's used internally by insurance companies to flag the amount by which your rate will increase with an accident. There is no such thing as accident forgiveness.

Claims, Premium, or Accident Protection: If you've purchased this protection from your insurance company, your first at-fault or partially at-fault accident will not increase your rate.

Car Carma: When bad things happen to good drivers, could your astrological sign be to blame? Here's what influence your astrological sign has over your driving:


An association shop member or the shop owner/operator can help access a web-based portal. Once sufficient data has been inputted, this will allow the vehicle owner to determine accurately the additional costs of having the collision repair work done under an insurance claim. The "Accident Claim Penalty" will be the amount charged by the insurer in additional premiums after receiving a vehicle damage claim (usually over a 6 year span for an at-fault claim). Many "Partially At-Fault" accidents are treated the same as a "At-Fault" accident. Simply telling the insurer of an accident will trigger increases. Police are not allowed to tell insurers of any accidents.

Courtesy of

Let's say you're driving a 1997 Toyota Corolla CE 4 door, and have 2 tickets on your record. You have collision coverage to protect your car. To replace this car, in today's market, it would cost $4,000.This is an "at-fault accident".

*The highest to lowest quotes are from 30 insurance companies.

*Rates resulting from "at-fault accidents" remain high for 6 years.

Driver: 2 Tickets Lowest To Highest

No Accidents: $1,338.00 to $4,229.00

1 Accident - 1st Year: $4,278.00 to $7,863.00

2nd Year Rate: $4,136.00 to $6,453.00

3rd Year Rate: $3,775.00 to $5,777.00

4th Year Rate: $2,616.00 to $5,029.00

5th Year Rate: $2,373.00 to $4,444.00

6th Year Rate: $1,611.00 to $4,229.00

Total Amount Paid: $20,127.00 to $38,024.00

In this case, the driver would end up paying 5 to 9 times more than what the car was worth to the insurance company.

Courtesy of

Premium Increase Examples

D Insurance
Before Penalty - $1,145.00
After Penalty - $2,482.00
Difference Over 6 Years - $8,022.00

B Insurance
Before Penalty - $1,148.00
After Penalty - $2,256.00
Difference Over 6 Years - $6,648.00

R Insurance
Before Penalty - $1,246.00
After Penalty - $1,687.00
Difference Over 6 Years - $2,646.00

E Insurance
Before Penalty - $1,263.00
After Penalty - $2,764.00
Difference Over 6 Years - $9,006.00

A Insurance
Before Penalty - $1,471.00
After Penalty - $4,323.00
Difference Over 6 Years - $17,112.00

Please Note: These rates were obtained using an online insurance rate quoting service.

The client was a 54 year old male, living in Hamilton, with no accidents in the last six years. He drove 20 km to work with a 1999 Ford Windstar. This is the "before penalty" quote. The client used the information online for the quote program with a change being an admission of one at fault accident worth $2000.00 the week before. With three companies, the online quote was declined and asked the client to telephone in for a quote. On two of the three phone calls, the client was advised that there would be no renewal quote- he would be cancelled as high risk.