Are you searching for a new insurance policy? If you recently relocated to Canada, the law requires you to change your license and vehicle registration as soon as possible.
But since you're new to the area, how do you convince insurance firms to cover you without proof? Typically, insurers require much information before committing to insure anyone, some you may not have at present, such as driving records and past claims.
This is where a claims experience letter comes in. Read on to learn more about what the letter does, how different it is from the driver's abstract, and, more importantly, ways to get one. But first of all:
What Is an Insurance Claim?
Simply put, a claim experience letter is a document written by previous insurers detailing your insurance history. It confirms your record as a policyholder with them and that the information provided to the new auto insurer is accurate.
Experience letters come in handy when you've switched insurers in a short span or haven't held a policy in some time. Besides, most new insurance companies ask for a letter of experience in exchange for quotes since they use it to determine premium eligibility.
Why and When Would I Need a Letter of Experience From My Insurer?
While not all insurers ask for a letter of experience, it boosts your chances of getting a good quote from a new auto insurer. This is because the more history you have with being insured, the less risky you're to insure.
However, it all depends on the specifics of the letter. For example, if you've made multiple small claims in the past, most insurers will hesitate to insure you.
But, if you've been claim-free for the same period with no accidents, insurers will give you the lowest cost, and some may even add a discount as a bonus on top.
That said, not all scenarios demand that you present a letter of experience, and there's no guarantee of better premiums or discounts. Here are three cases where an experience letter applies:
Shifting Provinces or Countries
Much of the information Canadian insurance firms have pertains to their regions alone. So, if you're moving from one province to another, and your information can't carry over, insurers may require a letter of experience to confirm your insurance history.
Furthermore, your insurance information may not be available on the public database if you're new to the country, so the letter speaks on your behalf.
Company vehicle drivers usually fall under a general fleet policy, which may not appear as part of insurance history. This requires the driver to obtain an experience letter from the fleet insurance before premiums calculation begins.
Mistakes in Insurance Policies
Some of the details in your insurance history may be missing from the document with the new insurer. If your insurance history records don't reflect the actual truth, getting an experience claim letter could help clear the air. After all, insurance companies do make mistakes as well.
What Kind of Information Does a Letter of Experience Contain?
An experience letter contains all the information an insurer needs to set up their premium plan. And while the specifics may differ from one insurer to another, there are those listed as a priority. These include:
Details of your Policy
Have you insured a vehicle or property in your previous plan? These are the initial details you'll find on an experience letter. Plus, the insured home address and car serial number.
Policyholder Names and Contact Address
Whether you have insured your car, property, or health, your name and address will appear first. Then, if there were third-party policies covers involving family members, their names appear among those listed.
This is the period from when you first obtained the insurance till the end date. It stipulates why the contract ended and if any negative issues such as nonpayment led to its end.
If you've ever made wild compensation claims before, that information appears on the claims experience letter. Inclusive are details of the cause of the claim and the amount compensated. In addition, if secondary people were covered, their names appear, and so does a claims-free history.
The Reason Why the Policy Ended
The reason for ending your contract with the previous insurance company may or may not be included depending on the information available. For example, if it ended because of nonpayment, it will be in your letter so the new insurer can know. On the other hand, if you only decided to switch insurers, then that reason may not be as necessary.
Benefits of Having a Letter of Experience
A claims experience letter is one of the significant factors insurance firms consider before issuing individual plans. Obtaining one could be in your best interest because:
Getting pocket-friendly insurance plans without a letter of experience is almost impossible in Canada. This is especially true if you've relocated to a new province or from a foreign country because insurers find it difficult to believe your word.
And since they can't access your information on the public database, the letter serves as a bargaining tool for better rates. Some auto insurers even offer claim-free discounts for drivers who've never filed a single claim in several years.
Most insurance firms are hesitant about the unknown, so they never enter into contracts without a background check. But, if the insurer can't access your records on the database, for one reason or another, they'll request for a letter of experience to prove you're, in fact, the type of policyholder you claim.
Once they can prove this, it won't take much longer before they process your application faster.
Some of the information on your insurance history may be false due to a mistake by the insurance firm while compiling the documents. Any negative information could lead to high insurance rates or even rejection.
Furthermore, don't expect insurers to believe all that you say or show on paper without proof. They'll want a letter of experience because it contains more accurate facts about your insurance history. This way, they can determine the best individual plan.
How to Get a Letter of Experience
There are several reasons why you may decide to get a claims experience letter that an insurer approves of.
One is if you were secondary insured to someone else's insurance policy. Two, when there are gaps in your policy history, meaning you haven't taken an approach in years and the CLUE report can't locate the last five-year report.
And lastly, if there are missing details in your insurance CLUE report because of an error on the insurer's end.
Some insurers will ask for an experience letter while others won't. So, it's always advisable to wait for the insurer's instructions before proceeding.
If they happen to request a letter of experience, contact your previous insurer through one of their agents and make the request.
If the agent is unavailable, ask a broker to help you get in touch with one since brokers can't write a claim experience letter themselves.
Is a Letter of Experience Different From a Driver's Abstract?
From afar, a letter of experience may exhibit similar features to drivers' abstract, but in reality, they're pretty different. While both are useful to insurance firms when determining insurance rates, drivers' abstract only applies to auto insurance.
In a nutshell, a driver's abstract is a record of your driving license history. Also called the motor vehicle record (MVR), it clearly shows any traffic tickets you've had, driving license suspensions, demerit points, and drivers training.
But unlike a claims experience letter which must be five years older or more, the typical drivers' abstract is always three to five years max.
It won't show the non-moving violations such as parking tickets but include accidents and other significant suspensions in the personal driving report that eventually increase your premium rates.
A drivers' abstract is a record obtained from the Ministry of Transportation and not from the previous insurer. Furthermore, you can only apply for uncertified abstracts online, in person, by fax, or by mail. Charges depend on the mode of order.
To summarize, the specific details of the driver abstract include:
- Name (as it appears on your driving license)
- Drivers license number
- Date of birth
- License class (whether G1 or G2, for example)
- Conditions and endorsements (if you should meet specific requirements before driving)
- Status (licensed, suspended, or unlicensed)
- Earliest license date present
- Expiry date
Remember, it takes 15 business days for your abstract record to come out. At the same time, a claims experience letter could take less or more time, depending on your insurer.
Get Your Claims Experience Letter Today
A claims experience letter can help you get better rates for new insurance plans you want to subscribe to. If you're in a new country or region, an experience letter may help you get the cover you need as fast as possible.
Just contact your previous insurer and ask them for the letter, which mostly comes via mail. Then, if you have one and would like insurance cover, get your quote today for the best insurance rates in Canada.