Accident forgiveness coverage in Ontario

What is accident forgiveness?

Accident forgiveness is a type of coverage offered by many insurers in Ontario. Most insurers offer it as an optional endorsement, which eligible drivers can purchase. Other providers have it built into their car insurance policies, with conditions for when it applies.

When accident forgiveness is active on a car insurance policy, it prevents a premium increase from taking place after a driver’s first at-fault accident during a certain period. In other words, if you have this coverage, your insurer will ‘forgive’ your first at-fault claim from being factored into your premium calculation. You’ll continue paying the same rate just like if the accident never occurred.

Accident forgiveness endorsements generally cost between $50 and $100 per year to add to your policy. However, prices vary with each insurer, so you’ll need to consult with your provider for an accurate quote.

Accident forgiveness isn’t available everywhere, either. It may be offered by some insurance providers but not by others. Square One, for instance, doesn’t offer accident forgiveness coverage.

How does accident forgiveness work?

Car insurance rates are unique to each driver and vehicle. Insurers use a combination of risk factors to calculate your premium, but one in particular is your driving history. Simply put, drivers with a cleaner driving history are quoted with lower premiums than those with a record of at-fault accidents or infractions. The longer a driver remains crash-free, the lower their premiums would be. Some insurers also offer an additional discount for each year a driver goes without filing a claim.

Accident forgiveness exists as a reward for these safe driving habits. It gives low-risk drivers a second chance so that one unfortunate collision doesn’t jeopardize years of hard-earned discounts.

To prevent your premium from increasing, accident forgiveness coverage must be active on your policy before the at-fault accident occurs. It won’t waive premium adjustments from any retroactive claims.

After an insurer forgives your first at-fault accident (and the coverage is used up) during the defined period, they’ll revert to their standard rating procedures. So, if you’re involved in another collision and you’re at fault, you would likely have to pay the price.

Your degree of responsibility in the accident determines whether or not your rates will go up. Insurers in Ontario use certain fault determination rules to assign a fault percentage to each driver, ranging from 0 to 100 percent. Accident forgiveness only applies to accidents for which you are at fault — those in which you are 25 percent at fault or more. On the other hand, not-at-fault accidents (those under 25 percent) don’t typically result in premium increases, so they won’t affect your accident forgiveness coverage.

With that said, Ontario has regulations that restrict when an insurer can adjust your rates, whether you have accident forgiveness or not. The Ontario Insurance Act specifies that insurers cannot increase a driver’s premium for minor at-fault accidents. A minor accident is one in which there are no injuries, no payouts by any insurer, and no damage exceeding $2,000 per car. ¹

Now, what happens if the accident doesn’t qualify as minor? If you have accident forgiveness, your rates won’t go up. If you don’t, your premium could increase by 5% to 15% for your first at-fault claim. ² Most insurers calculate premium increases differently from one another, so this range may vary. But usually, it’ll be based on your driving history and the total damages resulting from the accident.

If you’ve added accident forgiveness as an endorsement, you’ll typically need to renew it at your policy’s annual renewal. That’s because coverage is valid for one policy term at a time. Some insurers renew this coverage automatically if you’re still qualified, whereas others might require that you request it each time.

It’s wise to double-check with your provider at renewal to confirm that the endorsement is still in place and the cost hasn’t changed — just to avoid any surprises.

How does a driver qualify for accident forgiveness?

In Ontario, accident forgiveness is offered on an eligibility basis. There are certain conditions you’ll need to meet first before you can qualify for it:

• You must have an active car insurance policy. Accident forgiveness coverage is tied to the driver’s car insurance policy. So, you’ll need to obtain it from the same provider you’re insured with.
• Your driver’s record must include an accident-free period. In Ontario, vehicle accidents remain on your driving record for up to six years. You’ll typically need to wait until no accidents show on your record to qualify again, even if one of them was forgiven.
• Your policy must be for a private passenger vehicle. Accident forgiveness coverage only applies to policies that insure cars, trucks, motorcycles, and motorhomes. Commercial vehicles don’t fall under this category, so they are not eligible.
• You must be the principal driver. Accident forgiveness coverage typically only applies to the primary driver listed on your policy, not to any secondary drivers. Some insurers may offer the option to buy supplemental coverage for other listed drivers. ³

Some insurers may impose alternative criteria. For example, they may only offer accident forgiveness to longstanding customers who have held an active policy for several years. In BC, for example, ICBC will forgive one crash after 20 years of driving experience, provided you’ve remained crash-free for the last 10. ⁴

That said, it’s always best to speak to your specific insurer about the requirements they’ve imposed.

What does accident forgiveness not cover?

Other than protecting your premium, accident forgiveness doesn’t offer any additional coverage on your policy. While it may prevent your premium from going up, you’ll still need collision or all perils coverage to cover the damage to the vehicle itself. It also won’t cover your insurance deductible or any other costs associated with your claim, such as medical bills or legal costs.

Not all at-fault accidents are forgiven, either. Accident forgiveness coverage won’t apply to:

• Accidents resulting in a Criminal Code conviction, such as driving under the influence or without a license.
• Subsequent at-fault accidents after the first was forgiven.
• At-fault accidents occurring after you switch insurance providers (you’ll need to qualify for it with your new insurer)
• Accidents resulting from the operation of a commercial vehicle.

If you’re convicted of a traffic offense, accident forgiveness won’t stop demerit points from being added to your driver’s license either. Having demerit points doesn’t automatically disqualify you from receiving accident forgiveness. However, they can make it tough to obtain from insurers with stringent requirements.

Commonly asked questions

Does accident forgiveness coverage continue if you switch insurers?

No, accident forgiveness coverage does not follow you when you switch insurers. It’s tied to your specific policy and provider. When you terminate your policy with one insurer, you also terminate the coverage that comes with it. Once you switch providers, you’ll need to re-qualify for accident forgiveness by satisfying the eligibility criteria they’ve set.

When you insure with a new provider, they’ll assess your risk profile from scratch and consider any existing at-fault accidents on your driving record. An at-fault accident can stay on your record for up to six years in Ontario — even if it was forgiven by your previous insurer. And, since the forgiveness won’t carry over to your new policy, you might have to pay more this time around.

Does accident forgiveness coverage continue if you switch cars?

Yes, accident forgiveness typically still applies if you change your vehicle. However, this is contingent on two conditions: you remain with the same insurer and have no additional at-fault accidents on your driving record. Most insurers will agree to transfer it to your new vehicle, even if it’s a new policy.

Does accident forgiveness reset?

That depends on the insurer. Some insurers may not offer a reset period after forgiving your first at-fault accident — accident forgiveness would cease entirely after the first use. Others may have a waiting period of several years, during which you must stay accident-free. Terms of coverage will vary by insurer, so make sure to check your policy.

Sources

1. “Understanding Automobile Insurance.” Financial Services Commission of Ontario, www.fsrao.ca/media/7376/download. Accessed 1 Sept. 2024
2. “How Much Will My Insurance Increase After a Car Accident.” Canada Drives, www.canadadrives.ca/blog/car-finance/how-much-will-my-insurance-go-up-after-an-accident. Accessed 1 Sept. 2024
3. Gregorski, Mark. “What Accidents Don’t Qualify for Accident Forgiveness Insurance?” Driving, 2 Mar. 2024, driving.ca/features/insurance/accident-forgiveness-insurance-qualifications.
4. “Listing a Learner on Your Policy.” ICBC, www.icbc.com/insurance/costs/drivers-experience-crash-history/learner. Accessed 1 Sept. 2024

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