How Accidents Impact Your Insurance Premium

Every driver - even really good ones - can have a bad day on the road. Whether you miss that speed bump or collide with another car, by definition, accidents are never intentional. But unintentional doesn’t mean “not responsible”. And in some circumstances, a collision can result in higher insurance premiums.


Who is responsible?

For insurance companies, one way to effectively manage car accident claims is to establish an at fault party— even if there was nothing you could have done to prevent it and the police haven’t charged you with an offence.


  • Depending on the type of collision you may be at fault if you’re the sole driver

If you are in a collision with a driver of another vehicle, insurers decide who is at-fault based on the Fault Determination Rules. On occasion, it may take time and further police and/or insurer investigation to determine who ultimately caused the accident. In any event, being responsible for an accident could be grounds for an increase in your auto insurance premiums.


What about Ontario’s No-fault Insurance?

Most provinces have some form of “no-fault” car insurance system. Under a no-fault insurance system, you deal with your own insurance company regardless of who is at-fault. This system avoids delays and costs associated with other insurance systems that require an insurer to go after the at-fault driver for compensation through the courts.
That being said, the law still requires insurance companies to assign a percentage of fault for each of the drivers involved in the accident based on the Fault Determination Rules. Generally, if you’re fully or partially at fault in an accident, insurance companies will increase your premiums at your next renewal date.


How long does an at-fault accident affect my premium?

An accident will affect your record depending on where you live, and the nature of the accident.


What if I have accident forgiveness?

In general, you may qualify for accident forgiveness if:

  • You and all other drivers of the car have a clean driving record (for example, no at-fault accidents)

Then you may qualify to have your first at-fault accident “forgiven.” That means your auto insurance premiums may not go up because of an at-fault or partially at-fault accident*.
It is important to know that insurance companies will only “forgive” one accident. If you have a second accident, expect to have your premium increase.


How to lower your premium after an accident

Even if an accident is the cause of an increase in your insurance premiums, insurance companies could work with you to help keep your premiums manageable.
*Your auto insurance premium may increase for reasons unrelated to the collision.

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