Think Twice Before Paying Out of Pocket for a Fender Bender
Article by Matthew Newton Reid
and Aislyn Sax
It is illegal not to report an accident to your insurer, yet according to a recent CBC article a poll of 1,000 people commissioned by the Canadian show Cost of Living found that 43% of people who got into a car accident paid for repairs out of pocket to avoid an increase in their insurance premium.
It can certainly seem like a good financial choice to pay a few thousand in cash to a repair shop or to the other driver to make the problem seemingly disappear. But these short-term fixes can hurt you in the long run.
Paying out of pocket and not reporting an accident can leave drivers exposed to hundreds of thousands of dollars in legal liability, and they risk voiding their insurance policies entirely.
In Ontario, the Insurance Act requires drivers involved in a motor vehicle accident to report accidents to their insurer within 7 days.
Furthermore, in order to qualify for Statutory Accident Benefits such as medical treatment or income replacement, you need to submit an Application form (called an OCF-1) within 30 days of the accident. If you don’t file within the required timeframe and develop injuries down the road, you could be denied coverage.
Not reporting an accident to your insurer, could be interpreted as material misrepresentation and can lead to your contract being voided leaving you personally responsible for lawsuits.
The Real Cost of not reporting
Our personal injury group regularly receives calls from people in the following unfortunate situation: a caller contacts us and says they had an accident and paid out of pocket, thinking everything was fine at the time, they did not report the accident to their insurer. Sometime later the other driver files a lawsuit against them out of the blue, and the caller’s insurance refuses to respond because they were never notified when the accident happened. Now the caller is looking at defending a $2-million lawsuit without the benefits provided by insurance like coverage of legal fees, which typically costs tens of thousands of dollars in addition to the potential liability damages.
Conclusion
Although it might seem like an easy way to avoid a bump in your car insurance, failing to report an accident to your insurer is incredibly risky. In Ontario, there is a two-year limitation period to start a lawsuit after a crash. That means even a small fender-bender that occurred within the last two years could see you facing a massive lawsuit alone, without insurance.
If you’ve been in a car accident and are debating whether you should just pay the damages without reporting, we recommend you contact a lawyer for legal advice first. Consultation are free with one of our personal injury lawyers, reach out to us at 519-672-9330.
