Potholes And Insurance Coverage
Believe it or not, winter is almost over; there are only a couple of months to go (hopefully) before you see the leaves budding and feel the extreme discomfort of hitting a pothole. MPI handles hundreds of pothole-related claims each year and the City of Winnipeg is notorious for pothole-laden streets, with our politicians frequently campaigning about better road repair. A remarkable, very concerning trend has popped up recently, though – motorists not claiming pothole damage through MPI, opting instead to pay out of pocket.
These motorists are probably concerned by stories like this one, where a motorist who hit a pothole was penalized 5 points on his Driver Safety Rating. When a pothole damages your vehicle, you’ll usually be found to be “at fault”, because, hey, no one else put the pothole there, and you drove into it. There are exceptions to this rule, of course – if there was no reasonable way of you knowing about or avoiding the pothole, you won’t lose merits (though you’ll probably still have to pay the deductible).
Let’s imagine you have a $2,000 dollar vehicle premium and that you’re neutral on the Driver Safety Rating scale. A 5 Point drop in the scale will increase your Driver’s Premium by $405. Your premium will not be adjusted. That means, over the course of 5 years, if you stay at -5 (which you won’t, but we digress), you’ll have paid $2,025 more than if you hadn’t claimed. That means that if repairs cost more than $2,525 (that figure includes a $500 deductible), it’s a good idea to claim. The exception to this is if you think you’re going to get a lot more demerits in the coming years, in which case the -5 points could lead to more problems down the road. Our guess is that no one is calculating demerits they anticipate getting, though.
Calculations can get a bit trickier when you’re higher on the scale, though. At 15 points, -5 points will bring you to 10. That means your vehicle premium discount slides from 33% to 27%, and that you have to pay $5 more a year for your Driver’s Premium. With a base vehicle premium of $2,000 per year, your premium goes from $1,340 to $1,460, a $120 annual increase. Tack the $5 extra on top of that, and over 5 years you’ve paid $625 more – hardly enough to justify not claiming.
When you’re further down the scale, a 5 point decrease is equal to $1,000 extra per year. That means that over the course of 5 years, if your merits don’t increase, you’ll have paid $5,000. All of the calculations we’ve made, in fact, assume no other changes to your Driver Safety Rating. Assuming all of your other years are full of safe driving, the total you’ll pay will be far less.
When you’re unsure about the auto insurance Winnipeg citizens are most often plagued by (potholes), contact us; we can help you determine if claiming will be worth your while.