Auto theft leading to multiple claims, coverage issues

Your clients may find themselves without comprehensive auto insurance coverage if they submit multiple claims within a certain timeframe, warns Adam Mitchell, CEO of Ontario brokerage Mitch Insurance. This situation may come up if insureds have their vehicles stolen multiple times.

Canada’s auto theft crisis continues to worsen, with recent data from Insurance Bureau of Canada (IBC) showing auto theft claims topping a record-breaking $1.5 billion last year, up from an estimated $1.2 billion in 2022. Some insurers are reporting instances of consumers having the same vehicle make and model stolen multiple times.

“Most insurance companies will no longer offer comprehensive coverage if you’ve had multiple claims within a set number of years,” Mitchell said in a press release last week. “The amount of claims and time period varies by insurer, but every company has a specific threshold as part of their coverage rules.”

For example, some carriers will allow only three comprehensive claims in three years, Mitchell reports. If you reach this limit, your insurance company will no longer make this coverage available. And if comprehensive coverage is necessary because of a leasing or financing agreement, “you’ll need to find it elsewhere, most likely from a high-risk insurer,” Mitchell says.

“If you have to go this route, the cost for the coverage will be significantly more expensive,” he says. “It could be two or three times as much as you’re currently paying for your insurance.”

Comprehensive auto insurance provides protection for stolen vehicles or vehicles damaged during a theft attempt. It provides coverage for any vehicle damage that isn’t caused by a collision, including theft, vandalism, fire, severe weather, natural disasters and falling objects.

Although comprehensive insurance is optional, it’s usually required as part of a vehicle leasing or financing agreement.

“This contractual requirement is causing problems for drivers who have had to submit several comprehensive claims because their vehicle has been stolen multiple times or damaged during repeated theft attempts,” Mitch Insurance says in the release. “Unfortunately for those who have had their cars stolen numerous times, the more auto insurance claims you make, the more your coverage and future premiums may be impacted.”

Three claims since 2023

Mitch Insurance recently assisted a driver who had submitted three comprehensive claims since 2023 due to auto theft. Because of this, their insurer stopped offering the coverage. But since the driver needed it for their lease, they had to find a new policy.

Their previous insurance was about $2,600, but they were being quoted $11,500 for a policy that included comprehensive coverage. “We were able to find a policy for less than $9,400 and that rate could be lowered to under $8,500 if the driver chose to enroll in a telematics program,” Mitch Insurance reports. “A better price than the $11,500 they were quoted, but still significantly more than what they were paying before surpassing their insurer’s comprehensive claims threshold.

“You may want to think twice about putting that claim on your insurance record, especially if you’ve already had a comprehensive claim or two,” Mitchell adds. “If you need comprehensive coverage for your lease or financing agreement, you could see your insurance skyrocket over a couple of smaller claims.”

Daniel Ivans, a RatesDotCa insurance expert and licensed insurance broker, told Canadian Underwriter last month reports of multiple vehicle thefts is not “just an isolated case.

“Anecdotally, we are hearing of a growing number of instances of insurers paying out for multiple auto thefts of the same vehicle make and model to the same person,” he says. “This was a very rare occurrence in the industry prior to the auto theft crisis.

“We had somebody who had a Range Rover, and then they replaced a Range Rover with a Range Rover, of course, and that was stolen too.”

IBC doesn’t track individuals with vehicles stolen more than once, reports Rob de Pruis, the association’s national director of consumer and industry relations. But auto theft is a problem right across the country, including in Fort McMurray, Alta, he says.

“Anecdotally, I absolutely have friends that know people who have had a couple of vehicles stolen over the last few years.”

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