Claim Forgiveness Coverage: to Avoid a Premium Increase After an Auto Claim
Article revised on 30 October 2018
Perhaps someone has stolen or vandalized your car. Or your teenager has been in an accident while driving your car. Or you somehow failed to see the giant pothole that busted your wheel. One of the concerns you have in such situations is that you’ll have to pay a higher premium the next time your policy comes up for renewal… that is, unless you’ve purchased optional auto claim forgiveness coverage! Interested? Keep reading!
Why do Auto insurance costs increase after a claim?
In the event of an auto claim, you must, among other things, contact your insurer to report the damage sustained or caused, even if you don’t wish to make a claim. Unfortunately, statistics show that people who file one claim are more likely to experience another loss. For that reason, insurers record all automobile losses for a period of six years in a shared database, known as the Automobile Claims Database (FCSA). When you renew your auto insurance or insure a new vehicle, insurers use the claims recorded in your FCSA file to determine the risk if you were to be involved in another accident. The more claims recorded in your file, the higher the risk and the more your premium will increase.
However, there is now a way for Quebec drivers to avoid this hike in premiums: optional claim forgiveness coverage.
How does claim forgiveness work?
Claim forgiveness coverage allows you to avoid premium increases resulting from one or even two auto claims, over a five-year period. Even though forgiven claims are recorded in your FCSA file, your insurer will not take them into consideration when calculating your premium the next time your policy comes up for renewal! Your premium might still increase slightly due to other factors, such as an underwriting revision or inflation. But these potential increases are minor compared to the average premium increase due to a claim.
A number of versions of this coverage are available on the market, so do the necessary research to ensure that the one you choose offers the best value for the money. Certain insurers do not apply claim forgiveness to all types of claims or impose strict conditions. For example, they could require you to maintain your coverage for five years, or they could apply the coverage only to drivers with a minimum number of years of driving experience.
Other insurers offer a less stringent version, in which claim forgiveness continues to apply for as long as you have personal auto insurance with us, even if you decide to remove this option.
A small investment with a big return!
Good claim forgiveness coverage is likely to cost you less than the average premium increase caused by a single auto claim!
You may think that this type of coverage is not for you, because you’ve never had an accident or filed an insurance claim. Actually, anyone can have an accident. For just a few dollars a month, you can protect your good driving record and ensure peace of mind, not to mention a healthier bank balance!
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