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Car insurance problems that can affect insurability in Quebec.

When buying car insurance, all customers are required to answer a list of questions pertaining to their driving history, finances, and personal circumstances.

In fact, certain situations can make it difficult for a driver in Quebec to get car insurance. We are referring to bankruptcy, drunk driving, a history of non-payment, and criminal history or record.

What are some of the consequences that these factors can have on your car insurance and your premiums?

Can you still hope to get car insurance at a good price?

The answer is yes. Below you will find answers to frequently asked questions about car insurance problems in Quebec.

What is the impact of bankruptcy on car insurance premiums?

Effects on bankruptcy on auto insurance.

Bankruptcy can have a negative impact on various aspects of a person’s life. Auto insurance is no exception.

Some insurers view consumer proposal and bankruptcy differently, and each situation may have its own conditions.

However, not all insurers have different rules for bankruptcy and consumer proposals. Both of them are regarded similarly by many insurance companies.

The question we should ask ourselves is: Why does this affect insurance?

In fact, when someone is in the process of bankruptcy, they are in a precarious financial situation, and are considered to be at high risk for default. The insurer takes this into consideration because it wants “good paying” customers and avoid payment issues. 

More indirectly, insurers also assume that someone in the process of bankruptcy has “nothing to lose” and could take more “risky” actions to claim money from their insurance company.

Auto Insurance and Bankruptcy

When you speak to your insurance company, one of the first questions you will be asked is whether you have filed for bankruptcy or a consumer proposal in the past.

If the answer is yes, your insurer will ask whether your bankruptcy has been discharged. 

If the answer is no, several insurers may deny your application for coverage. In other cases, they may be willing to issue you a policy with conditions (tag system, increases in deductibles, refusal to cover replacement cost, non-eligibility for discounts, etc.).

If the client is discharged from bankruptcy, his insurability and the conditions will depend on the number of years since the discharge.

If it has been more than 1 year and there are no other aggravating factors in a person’s file, he may be considered acceptable based on the insurer’s standards.

If it has been less than 1 year and other aggravating factors are present, the insurer may consider the risks to be higher and deny your application.

Auto Insurance and the Consumer Proposal

A consumer proposal is a legal process wherein a Licensed Insolvency Trustee submits a proposal offering to pay creditors based on a timeline until the debts are paid off.  The maximum term of a consumer proposal in Quebec is five (5) years. It is a method of debt management for people with insolvency problems who do not want to resort to bankruptcy.

When it comes to consumer proposals, insurance brokers will often say it’s black or white. It varies from one insurer to another and many of them have a different approach for consumer proposals and bankruptcy. 

Some may approve an applicant with conditions attached while others may just deny coverage outright. 

Brokers are familiar with how insurance companies look at these issues and can help you find an insurance company who is willing to provide coverage.  He will shop around on your behalf and find the best available policy for you.

Drunk Driving Record and Car Insurance

Consequences of a drunk driving record on car insurance.

What are the consequences of license suspension for drunk driving on car insurance?

The question asked by insurers to verify this fact is as follows: Have you had an offense or a suspension of your driving license in the last 3 years?

If the answer is yes, the insurer will then ask: When exactly did this happen?

First of all, you should know that offenses less than 3 years old are usually the ones that are taken into consideration by insurance companies.

If a customer has a drunk driving record in the last 3 years, his premiums will be increased accordingly.

If it is a recurrence, amendments will be added to the contract.

Amendment #31

The law may require a breathalyzer. If one is needed, endorsement 31 must be added to cover the value of the customer's breathalyzer.

Amendment #28

An endorsement 28 will also prohibit the driver from driving any that does not have a breathalyzer at the wheel.

For a driver with several license suspensions and recidivism, the insurer will evaluate the case and in most cases, his driving record may be requested from the SAAQ together with the case records.

Can a Criminal Record affect Your Auto Insurance Premium?

A criminal record directly affects insurability and the cost of insurance.

A criminal record will directly affect a client’s auto insurance premiums, causing the price to go up under certain conditions.

The insurer will automatically ask the client: When did this happen?

The PAFCO insurance company provides insurance coverage to most of the risky and unacceptable cases, under certain conditions.

Some criminal records may not be considered, even if they are less than 5 years old. For example: shoplifting, assault, fight, disturbing the peace, etc.

The insurer consider at this time that there is no correlation between the crime committed and a higher probability of a claim.

What happens if your car insurance premiums are not paid?

Non-payment of premiums is another common issue in auto insurance. 

If you have skipped on paying car insurance premiums in the past, your policy would have been cancelled. This will have a significant impact on your car insurance. 

The question that insurers will ask you is: Have you ever had a cancelled policy of denied by an insurer in the past?

If your policy was cancelled for non-payment:

A customer who has a car insurance policy cancelled due to non-payment of premiums in the last 4-5 years will be evaluated. The insurer may decide not to grant coverage, considering the frequency and number of cancellations in the past. If the customer was canceled by the same insurance company, he must pay his outstanding dues before being reinsured. Depending on the insurer, an additional premium could be added to the contract depending on the time of the last cancellation.

If you have been refused by an insurer:

The insurer will ask the reason for the refusal in order to understand whether it is a minor reason or a big issue that may have an impact on the policy under consideration. Depending on the seriousness of the reason for the refusal, the insurer can insure you with a standard policy or deny coverage.

The frequency of loss and history of claims: Do they affect premiums?

Claims and losses affect your insurance premiums.

Finally, what is the effect of frequent claims on your auto insurance premium?

You should know that as soon as there is a claim, it will increase the insurance premium.

Frequency of Claims and insurability

If a client frequently makes claims such as once a year, his insurability may be compromised.

Here is one of the best examples: If a customer who travels a lot claims for a broken windshield replacement every year, he could be refused by the insurer, or this “risk” could be excluded (endorsement 13) from his contract. He will be covered for the other “risks” in section B.

Making frequent claims against your car insurance policy definitely affects the quality of the coverage provided to you and the price of your premiums.

Claims history

A claim that has occurred in the last 5 years will have an impact on your insurance premium.

An at-fault accident will have a greater impact on your premium than those wherein you were not responsible. 

Many people are not aware that some insurers will also consider accidents without claims. How?

When you get into an accident, even if you do not file a claim, the other motorist involved may report a claim. The incident will appear in your claims history as an undeclared loss, and this may have an impact on your premium depending on your insurer.

Get help from experts in car insurance

You have probably come to realize that certain problems or situations can make it difficult for you to find good car insurance coverage.

You need to remember, though, that all is not lost. Insurance brokers, experts in car insurance, can help you find the best remedy for your situation.

Brokers have good relationships with insurance companies and are knowledgeable about policies and standards that apply in your case. They can help you find the right car insurance solution for you at the right price.

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