Auto Insurance

• I would like to insure myself as the main driver of my father's car, because I'm the one who will be driving it. Does it go under my file or his?  Answer
• I've been in two rear-end collisions. Why is it that in such accidents the insured parties are each compensated by their own insurer and not by the company insuring the person at fault? Because of these claims, my premiums have gone up despite my 6 years of safe driving. Answer
• I haven't informed my insurer that I drive my car to work. What am I risking?  Answer
• My 17-year-old son drives my car. Do I have to tell my insurer?  Answer
• I had two accidents last year and didn't declare them to my insurer. Is this a problem?  Answer
• If I have an auto accident and decide not to make a claim for damages, do I still have to declare the accident when I negotiate a renewal?  Answer
• If my car is ten years old, is it worth it to have damage insurance?  Answer
• I just had my third accident in three years, and none of them were my fault. Will they affect my insurance premium?  Answer
• Which is better: the replacement cost guarantee available from the dealer or a replacement cost rider from my auto insurer?  Answer
• If my car is a total loss, do I have to replace it with the same make and model? Can I get the cash value instead?  Answer
• How long do I have to submit a claim?   Answer
• Should I tell my insurer if I put my car in storage for the winter?  Answer
• What does "full insurance" mean?  Answer
• Why are the parties in an auto accident compensated by their own insurers rather than by the insurer of the driver at fault?  Answer

Frequently Asked Questions: Auto Insurance

Q - I would like to insure myself as the main driver of my father's car, because I'm the one who will be driving it. Does it go under my file or his?

A - This change must be reported to your insurance company, which will take your claim record into account to determine your premium. To be registered as the main driver, it is important that you be the primary user of the vehicle because it's your claim history that will be used to determine the premium.

The insurer can also take into consideration the claim records or driving records of other possible drivers.

Remember that if an accident occurs, it will appear not only on the record of the person driving the vehicle at the time, but also on the record of the main driver indicated in the insurance policy.

Q - I've been in two rear-end collisions. Why is it that in such accidents the insured parties are each compensated by their own insurer and not by the company insuring the person at fault? Because of these claims, my premiums have gone up despite my 6 years of safe driving.

A - The Automobile Insurance Act was amended in 1978. In addition to many major changes to claim settlement procedures for bodily injury, a number of other measures were introduced to simplify and speed up the settlement of claims for material damages.

One such change was the implementation of the Direct Compensation Agreement. This agreement establishes each driver's degree of responsibility according to the circumstances of the accident and the Road Safety Code.

Once the new system was in place, insurers stopped going to court to seek repayment of indemnities they had paid to policyholders who were not at fault. It became much easier to settle auto claims. Not only was there a significant drop in the number of court cases, but claim settlement also became much faster. Before 1978, insurers faced huge legal fees and lengthy court cases could go on for years without insured parties receiving compensation.

Your Fault in an Accident
When you submit a claim, your insurer usually indicates the degree to which you were at fault (0%, 50%, or 100%). This affects your settlement according to the guarantees and deductibles you chose for your policy.

If you disagree with the degree of fault attributed to you in an accident claim, you must discuss it with your insurer, as your insurer is the only party against whom you can take recourse in such cases.

Claim Frequency & Premiums
It's always disturbing to see a claim in your file if you don't think you were at fault. Generally speaking, insurers won't penalize policyholders for their first accidents when they're not at fault.

Unfortunately, the same does not hold true when the number of claims and total indemnities rise, and most insurers will then increase premiums. Also remember that many companies give discounts to policyholders who have never made a claim. This discount is lost as of the first claim, regardless of whether you were responsible for the accident or not.

Your premium hike may be due to a variety of reasons: lost discount, the number of claims you have had, or how much at fault you were deemed to be in your accidents.

Auto Insurance: A Highly Competitive Market
In the auto insurance market, competition is fierce and it can really pay to shop around. You may also benefit from a lower premium by increasing your deductible.

Q - I haven't informed my insurer that I drive my car to work. What am I risking?

A -  You're risking not being 100% covered. Your insurer sets your premium according to your risk level. If your insurer isn't aware that you use your vehicle daily to get to and from work, you may be paying only 70% of what you should be. If you're in an accident on your way to work, your insurer may therefore pay only 70% of your repair bill.

Q - My 17-year-old son drives my car. Do I have to tell my insurer?

A - Definitely. The insurer will take your son's driving record into account. Otherwise, you risk being only partially covered if your son is in an accident. Make sure you add your son to the policy as either an occasional or main driver, as the case may be.

Q - I had two accidents last year and didn't declare them to my insurer. Is this a problem?

A - Yes! According to your policy, you are under obligation to declare the accidents! Insurers consult the Automobile Claims Database, a directory of all auto claims made over the last six years. In most cases, your insurer sets your auto insurance premium based on the information you provide, then consults the Claims Database and makes any adjustments it deems necessary to the premium or policy. It's important to answer your insurance company's or your insurance broker's questions honestly.

Q -  If I have an auto accident and decide not to make a claim for damages, do I still have to declare the accident when I negotiate a renewal?

A -  If the accident involved another vehicle, it will be recorded in the Automobile Claims Database under your name even if you haven't made a claim. When you renew your insurance, we strongly recommend that you declare the accident since your insurer can find out anyway by consulting the Claims Database.

Q -  If my car is ten years old, is it worth it to have damage insurance?

A - It's a matter of choice. To make the right decision, you should consider the premium you would pay for Section B coverage, the deductible, the value of the vehicle, and your ability to bear the financial burden of the loss if you should be at fault for a collision.

Some insurers require that vehicles over 10 years old or under $2,500 in value be inspected before insuring them. After the inspection, some insurers may refuse to provide Section B coverage (for vehicle damage due to an accident for which the driver is responsible, or due to fire, theft, or vandalism) because the vehicle is in poor condition.

Insurers usually advise their customers to carefully consider the cost/benefit ratio of complete coverage for a vehicle of low value. Is it worthwhile to pay a $500 premium for a vehicle that's worth $2,000 when your deductible would be $250 or $500?

Remember that if you're not responsible for the accident, damage to your vehicle will be reimbursed under the compulsory Section A insurance.

Q - I just had my third accident in three years, and none of them were my fault. Will they affect my insurance premium?

A - It depends on your insurer's policy on rates, but your insurance premium will probably go up. Claim frequency is always a deciding factor in determining the cost of your premiums.

Remember that when setting rates, insurers look at both fault and frequency. Therefore, it is entirely normal that policyholders who make claims every year, even if the accidents were not their fault, will pay higher premiums than those who have never submitted a claim.

Q - Which is better: the replacement cost guarantee available from the dealer or a replacement cost rider from my auto insurer?

A - Since there are so many products out there, you really have to consider your needs and compare the products that are offered to you. Here's some advice:

• Read the two policies carefully and take note of the differences.
• Compare the cost of each policy for the same time period and the deductible.
• Check the maximum coverage period.
• Ask what the eligible vehicle value is.
• Find out whether the policies apply to both new and used vehicles and if they are transferable.
• Find out what the settlement terms are in the case of loss. Do you have to repurchase the same vehicle from the same dealer? If the vehicle is not declared a total loss, are all repairs covered, regardless of the vehicle's depreciated value?

Q - If my car is a total loss, do I have to replace it with the same make and model? Can I get the cash value instead?

A - If you have a replacement cost rider on your auto insurance policy, you can replace your vehicle with a new one with the same features, equipment, and accessories. If such a vehicle is no longer available, you can choose a vehicle with similar features. If you decide not to replace it, your insurer will compensate you based on how much you paid, without paying more than the regular price on the date of purchase.

If you don't have a replacement cost rider, your indemnity will be calculated according to the market value of your vehicle on the day of the accident. Your insurer will consult dealers and current buyers' guides, then average the cost according to the information obtained. As the policyholder, you should do the same in the event that you need to negotiate your settlement.

Q - How long do I have to submit a claim?

A - All insurance policies, whether automotive or home & property, state that you must report any claims affecting your policy as soon as you are aware of it. Failure to do so may invalidate your claim.

Q - Should I tell my insurer if I put my car in storage for the winter?

A - You can benefit from telling your insurer because a rider (FAQ #16) may be added that would keep only essential insurance active while the vehicle is in storage. You may be eligible for a discount during the storage period for temporarily suspended coverage. Discuss it with your insurer.

Q - What does "full insurance" mean?

A - Insurance isn't as complicated as it may seem. It includes Section A, which covers your civil liability (damage to a third party) and is required by law; and Section B, which covers physical damage to your vehicle (collision, fire, theft, vandalism, etc.) and is optional. There are also specific add-ons like the replacement cost rider.

If want to save money by reducing your coverage and taking out only "partial insurance" (Section A), think it out carefully first. If you're in an accident or your car is stolen, it will cost more than your initial savings since you'll have to pay for all the repairs or the replacement of your vehicle out of your own pocket.

Q - Why are the parties in an auto accident compensated by their own insurers rather than by the insurer of the driver at fault?

A - This change in accident insurance dates back to 1978, when the Quebec auto insurance plan was drastically amended in order to simplify and speed up claim processing. Private insurers agreed that they would no longer go after the insurance company of the driver at fault to recover indemnities paid out to the not-at-fault driver. The goal was to reduce the time and expense of settling a claim.

Since 1978, auto accidents have been settled under the Direct Compensation Agreement, which all insurers use to settle claims. Are you 0%, 50%, or 100% at fault? To find out, the insurer consults the Direct Compensation Agreement, which covers virtually all possible accident scenarios.