Automobile Insurance: Canadian Accident-Free Classification System

The precise wording of the heading is deliberate. The Canadian system is not a “bonus†nor is it properly described as “no claim†; it is a sub-classification of insureds according to whether they have been accident-free during a term of years ending at the inception of the insurance period. Specific rates are quoted in the Tariff for each sub-class, based broadly on the relative experiences; as a matter of arithmetical convenience, premium rates are calculated by applying discounts or surcharges to a “key†rate, but the percentage discounts or surcharges are not quoted in the Tariff, the Policy or the renewal papers.In the early 1930's a “no claim bonus†on British lines was part of the Canadian automobile insurance system. A percentage reduction or “bonus†was allowed from the premium specified in the Policy, provided the insured had owned and operated a private passenger car, free of accident or revocation of driving license, for a period of up to three years before the inception of the Policy. At that time the Automobile Insurance Market was profitable and highly competitive, both as between Companies and as between Agents. Because of inter-Company competition, confirmation of entitlement to the bonus was rarely attempted. Often it was not possible, as most Companies did not maintain an alphabetical index of insureds; an effort to set up an inter-Company claim-recording bureau broke down through sheer weight of numbers of claims.