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ask joanne

I had the unfortunate experience of running into the driver ahead of me at a (green) light. The damage to both cars was less than $1,000 and no one was injured. We did our due diligence and he called me the next day with an estimate. Although he has reported this to his insurance, he will not be filing a claim as we have decided to settle it ourselves. My question is: Even though no claims were filed and my insurance did not get involved, will my rate still go up? I would appreciate your input as I am debating over filing a claim or paying out of my pocket. I rear-ended his car so it appears that I will be at fault. – Tosh in Calgary

In addition to wondering whether your premium may increase, should the accident be reported to your insurance company, and what are the possible consequences of not doing so?

According to the Insurance Bureau of Canada, you must notify your insurer as soon as possible about any accident that must, by law, be reported to police, or for which you intend to make a claim under the policy. Auto insurance varies between provinces. In Alberta, total damages from both vehicles over $2,000 must be reported to the police. In Ontario, it's $1,000.

"In every insurance policy in Canada, there is a condition referred to, outside of Quebec, as statutory conditions," says Natalie Dupuis, senior product manager, auto, at RBC Insurance. "And it spells out the fact very clearly, that if there is damage to a person, property or your own automobile then you need to give notice with full particulars of all the information, and also give your insurance company your full co-operation. Some provinces go on to stipulate how many days you have to submit that information."

You believe you're at fault, and are understandably concerned about your future premiums. But just because you inform your insurance company of the accident doesn't mean you have to proceed with a claim.

It makes sense that you want to pay out-of-pocket for damages less than a thousand dollars, rather than pay a deductible and trigger a rate increase. However, what looks simple at the scene of an accident can turn out to be much more complicated.

"What sometimes happens is people think it's only small. They don't report it, and suddenly they get an estimate back from the other party," says Dupuis. "The other party has gone ahead and repaired the damage, and there's a $3,000 bill waiting for them at home. Wait – you said it was only going to be a thousand dollars!

"Well, they lifted the hood, found more damage and have gone and repaired it. Now they turn to their insurance company, well now, there's a problem. That's still a very simple one; not involving any lawyers or injuries. But sometimes people go home and they get headaches or start to hurt from the accident, and now it's more than just damages.

Now it's three to six months since the accident occurred. So, the sooner a situation can be put under control with professional advice the more contained it is."

In most provinces the other driver has up to one year to file a claim against you. In Alberta, it's two years.

In Ontario, Quebec, Nova Scotia and New Brunswick, if you're not at fault in an accident your company pays for your damages and does not go after the other insurance company. In Alberta, if you're not at fault, your insurance company will pay your damages and then turn to the at-fault insurance company to recoup – the technical term is "subrogate" – the damages.

If you pay for the damages and no claim is put forth for your damage or for the other party's damage, then your rates won't go up. But you should let your insurance company know about the accident.

"By calling your insurance company to say you've had an accident, you're at fault, you think it's minor and you'd like to pay for the damages yourself – at least you've met the conditions of your contract. You've called your insurance company and let them know. Plus, they may give you some advice as to what to do. If the other party changes their mind and goes to their insurance company, at least your information is already on file," says Dupuis.

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