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What does it mean for your insurance if you’re driving a recalled vehicle?

Whether your vehicle has been recalled or not, comparing car insurance quotes is still the best way you can save on your next auto policy.

If you’ve ever owned a vehicle in Canada, you’ve probably received the letter at one time or another: the manufacturer has recalled your car and it needs to go in for some kind of repair. According to Transport Canada, there were well over 1,200 vehicle recalls issued in 2023 alone.

If you’re like me, you have enough things to do without adding a stop at the dealership, so it might be a while before you get around to it. But could your car insurance be at risk if you don’t have your recall addressed promptly? Let’s take a look at how vehicle recalls affect your coverage. 

Key takeaways on recalled vehicle insurance

  1. Vehicles are recalled when there is a known issue that causes a safety risk. Repairs for a recall are almost always paid out by the manufacturer. 

  2. While insurers may factor in the likelihood of defects over time, having a recall on your vehicle generally won't impact your insurance rate directly. 

  3. Make sure you're taking appropriate action after your vehicle is recalled. Aside from the obvious safety concerns, an at-fault accident is one factor that will lead to increased car insurance rates. 

Why are vehicles recalled?

Vehicles get recalled when there is a known issue that causes a safety risk. These issues can be caused by manufacturing errors or defective parts, and sometimes introduced by repairs or modifications made to a vehicle after it was sold. While recalls are usually voluntary, they can be ordered by the government. Since 2018, the Minister of Transport has the power to order manufacturers to issue a recall.

The safety risk doesn’t have to be significant to lead to a recall. For example, Ford recently issued a recall for 32,328 vehicles because the owner’s manual didn’t include instructions for adjusting or removing the headrest for centre seating positions. 

Other times, the safety risk can be severe. General Motors recalled 4.3 million vehicles in 2016 over an airbag issue that caused at least one death and three injuries. In that case, a software bug prevented the airbags from deploying in some rare circumstances.

Recalls can affect other components, as well. Child car seats and tires can also be recalled when a safety issue is identified.

Who pays when there is a recall?

When a vehicle is recalled in Canada the cost of repairs is almost always covered by the manufacturer.

When a recall is issued, the manufacturer works with Transport Canada to report the problem. The recall includes a description of the issue, the associated safety risk, and what corrective actions need to be taken. If an inspection or repair is necessary, the manufacturer will pay your local dealership directly to have the work done.

If you’ve already paid to have the defect repaired prior to the recall being issued, you may be able to get your money back. Contact the manufacturer to ask whether they’ll reimburse you for the expense.

Note that the manufacturer won’t pay for other costs that could be associated with a recall. For example, if you don’t feel safe driving your vehicle and prefer to have it towed for repairs, you would be responsible for arranging that yourself.

How does a recall affect my car insurance?

The good news is that a recall doesn’t affect the cost of car insurance directly. But there are ways in which a recall could lead to higher insurance rates.

Having a recall on your vehicle, whether you’ve had it addressed or not, won’t directly affect the price you pay for car insurance. While insurance companies may factor in the likelihood of defects over time in their pricing, they won’t change your rates simply because your vehicle has been recalled.

Similarly, a recall shouldn’t affect your ability to make a car insurance claim after an accident. Even if the recalled part were a contributing factor to the crash, you’re unlikely to have your collision insurance claim denied. An at-fault crash will, however, lead to higher insurance rates and the possibility of your insurance company declining to renew your policy.

What a recall does do is limit the manufacturer’s liability in the event a recalled vehicle is involved in a crash. By reporting the problem and offering to pay to fix it, the manufacturer can argue that it was your responsibility to have it repaired.

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Why should I have my recalled vehicle repaired?

The best way to keep your insurance rates as low as possible is to drive safely. Crashing your car is a guaranteed way to raise your insurance payments, and failing to address a recall increases your odds of being in an accident. For more information read how car insurance claims affect your rates.

Insurance aside, vehicle maintenance is an important exercise in self-preservation. When a recall is issued for your car, it means that the manufacturer or government has a serious concern about a defect that could increase your risk of being injured or killed in a crash. Take your vehicle’s recall notice seriously and take corrective action as soon as you reasonably can. 

How can I find out if my vehicle has been recalled?

Transport Canada keeps a database of all vehicle recalls that’s easy to use. Just search for your vehicle’s make, model and year to see all the recalls that may apply. 

If you bought your vehicle used and aren’t sure whether an issue has been corrected, you can find out by contacting the manufacturer and asking them to check their records.

The bottom line

Vehicle recalls have no bearing on your car insurance rates or whether you can make a claim following a crash. However, they’re important for your safety and shouldn’t be ignored. Search Transport Canada’s database to make sure you’re aware of any recalls on your vehicle and take action to get defects repaired as soon as possible to reduce your risk of being involved in a crash.

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