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How a car accident affects your insurance premium

July 26, 2023
4 mins
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This article has been updated from a previous version.

Being in a car accident is a jarring experience, even if it’s a minor fender bender.

According to Transport Canada, there are about 120,000 police-reported collisions each year. In terms of motor vehicle fatalities and injuries in Canada, in 2021, Transport Canada’s data shows there were 1,768 fatalities, and 8,185 people were seriously injured.

Whether you’ve been in a minor accident or in a more serious collision, in the eyes of insurance companies, there is always someone who is at fault for a car accident.

Under Ontario’s no-fault insurance system, insurance companies use the province’s fault determination rules to determine who is responsible for a collision. These detailed guidelines outline who should receive blame in a wide variety of scenarios. Other provinces have their own fault determination rules that insurers follow. You could be found entirely or partially at fault in any collision.

An at-fault collision will remain on your driving record for up to six years, and it will affect your car insurance premium at renewal, increasing it by as much as 25 per cent. If you’re not at fault for a collision, it will not cause your insurance rate to rise.

Related: How a clean driving record can help keep your car insurance premium low

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One free pass: do you have accident forgiveness?

Some insurers offer a rider or endorsement you can add to your auto policy that’s referred to as ‘accident forgiveness’.

If you’ve been collision-free for at least six years, your provider may add it to your policy, but it can only be used once for an accident every three years. With accident forgiveness on your policy, if you are found to be at fault for a minor collision, your insurer will not increase your premium for the incident. However, the accident will be recorded on your driving record, and if you switch insurers, your new premium may reflect the accident.

In Ontario, the Insurance Act prohibits insurers from increasing premiums for a driver’s first minor at-fault collision in three years with less than $2,000 in damage and no injuries if there is no payout by the insurer

What to do if you’re in a collision

If you are involved in a collision, call 9-1-1 if you or anyone else is injured. If no one is hurt, and it appears the damage to both vehicles involved is less than $2,000, it's a good idea to visit a Collision Reporting Centre within 24 hours to have the incident documented.

However, if the damage looks to be greater than $2,000, both drivers should visit a Collision Reporting Centre. However, if the driver you've been in a collision with has no insurance, or if you suspect they are impaired, call the police.

Above all, do not admit to being at fault for the collision to other drivers or get into a confrontation with them, but do document what happened.

If it’s safe to do so, get out of your vehicle and take photos and a video of the damage to your vehicle and the accident scene. If you can, get the name, driver’s licence number, residential address, phone number and insurance information from the other driver, as well as their vehicle’s licence plate number and its make, model, and colour. Also, provide your information to them.

Call your insurer as soon as you can to report the incident and file a claim. If you have optional collision or upset coverage on your policy, your insurance provider will pay for damages to your vehicle resulting from an accident with another car, a streetlight, road sign, or any other stationary object if it is ruled you are at fault. They will also pay if you are a victim of a hit-and-run by an unknown driver. A deductible applies if you file a hit-and-run claim, and if it is ruled you are at fault for a collision. If you don’t have collision coverage and are at fault for the incident, you’re on your own to pay for the damage to your car.

However, if you’re not at fault for an accident, in Ontario, it’s your policy’s mandatory direct compensation-property damage (DC-PD) coverage that pays for damages to your vehicle and its attached contents.

Stay calm and shop your rate

Car accidents can happen to anyone, anywhere, at any time. Don’t panic if you’re in one. Regardless of the outcome, you can always do a quick comparison of auto insurance policies and premiums for free to find the coverage you need at a price you can afford.

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Liam Lahey

Liam Lahey is a versatile marketer with experience as a staff and freelance writer for many business and technology publications and newspapers. He previously worked as the editor and media spokesperson for RATESDOTCA, handling home, auto, and travel insurance topics.

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