We only look at our car insurance policies once per year, when we renew our contracts. Even then, we seldom take more than a few seconds to ensure that our coverages meet our needs. There are many details in the fine print that can surprise us. Some details could lead to costly problems later.
This is why we present five facts about auto insurance that you may not have noticed. Several of these facts may encourage you to make significant changes.
#1 – Submitting A Claim May Raise Your Premiums
We will start with the details that most people are familiar with. There is a high chance that your insurer will raise your rate if you file a claim. The amount of the increase will depend on several factors. The increase could be minimal if the claim is for minor damage done by another driver. Your premiums could rise if your claim is for minor damage to your vehicle from another driver.
Your insurer could adjust their assessment of your likelihood of submitting future claims. Rates will rise to reflect this increased risk.
#2 – Neglecting to Cancel Your Policy Has Consequences
Many consumers are surprised to find that they can switch insurance companies and keep their existing policies. They simply stop paying their premiums believing it is a cancellation de facto. It doesn’t. The policy could be cancelled for non-payment but it will remain on your credit report as a negative event. This can make it difficult or costly to find coverage in the future.
Send a written cancellation request to your current insurance company if you are planning to change your insurance company. Please specify the date you want your coverages to be cancelled.
#3 – Your vehicle is stolen, but your property is not covered
Imagine that you leave your laptop in the car overnight and then discover that your car has been taken. You will be compensated for your vehicle if you have comprehensive coverage. However, will you be compensated for your laptop? Most cases will not result in compensation.
Car insurance policies rarely cover personal property. Property insurance is a good option. You will receive compensation if your car is taken with your personal belongings inside (unless they are exclusions on your property insurance policy).
#4 – Your Car Insurer May “Forgive” An Accident
Accident forgiveness is a feature that some auto insurance companies offer. This protects you against a significant rate increase if you are involved in an accident. Normally, a serious accident at fault can lead to your premiums increasing by as much as a third. Your rates could be reduced by accident forgiveness.
This endorsement is usually offered by car insurance companies to drivers with a clean driving record. You won’t be eligible if you have multiple tickets and/or an at-fault car accident on your record. You should also remember that even though your insurer has “forgiven” you of an accident, it will still be on your driving record.
#5 – Your vehicle has a “CLEAR” history
Your premiums will be affected by the car you drive. You may not know how this happens. Each year, every make and model is assessed based on claims history. All cars and light trucks are given a Canadian Loss Experience Automobile Rating (or CLEAR) rating.
Certain vehicles are more likely to be involved in more costly or frequent claims than others. They are given a higher CLEAR rating. These ratings are used by insurance companies to predict future claims related to your car. You can expect higher premiums if your vehicle is frequently stolen.