How vehicle recalls impact your auto insurance in Canada

By: Mark Gregorski on September 19, 2024

If you own a car, you may discover a recall letter sitting in your mailbox at some point. This notice alerts you to an issue with your vehicle that needs fixing, which could be as simple as a loose bolt that needs tightening to faulty wiring that can spark a fire – as was the case with Nissan's North American-wide recall of more than 793,000 Rogue SUVs.

According to Transport Canada, one in five vehicles registered in Canada suffers from a defective component. Given the prevalence of vehicle recalls, you may be concerned about how they affect your safety and car insurance policy.

In this guide, we'll explain how vehicle recalls work, including how to find out about them and get them resolved. We'll also explain how owning or buying a recalled vehicle impacts your car insurance policy.

What are vehicle recalls, and why do they matter?

A vehicle recall is an action taken by manufacturers to address a faulty component that affects its performance or safety. Upon discovering the defect, the manufacturer first informs Transport Canada. Then, they notify affected drivers, describing the issue and how to fix it.

In Canada, manufacturers must comply with safety standards under the Motor Vehicle Safety Act to ensure their vehicles are safe to drive. They must legally notify car owners of a recall within 60 days of identifying the defect.

In rare cases, Transport Canada may take the lead in advising drivers of a safety defect through a news release when the manufacturer refuses to send a recall notice. Typically, this occurs when it uncovers an issue that severely threatens public safety, as in the case of Ford's F150 defective braking system.

If your car is subject to a recall, take corrective action as soon as you can. Driving a hazardous vehicle endangers not only you, but your passengers and other drivers on the road. It can also have negative consequences for your auto insurance.

How to find out if there's a recall on your vehicle

If a recall is issued for your car, the manufacturer will send you a written notice through the mail (a good reason to keep your contact details updated!). When moving to a new address, inform the manufacturer of the change by calling their customer service department.

Finding out about a recall on your vehicle can be more challenging if you purchased a used car. The manufacturer may not have your contact details in their database—only that of the previous owner.

However, you can visit Transport Canada's Motor Vehicle Safety Recalls Database to learn if your second-hand car has been recalled. All you need to do is enter the vehicle's make, model, and year.

You can also subscribe to Transport Canada's news feed to obtain up-to-the-minute news about recalls and review open and closed investigations.

Here are some other ways to find out about recalls for your car:

Check the manufacturer's website. For example, Ford has a page where you can search using your car's year and model.
Use Carfax's safety recall check. Enter the car's Vehicle Identification Number (VIN) to view its history and condition. If there are open recalls, you'll find them in the Carfax report.
Receive a notice from your insurance provider. Though uncommon, some insurance providers, such as Allstate, notify their customers of recalls related to vehicles they own.

Regardless of whether you own a new or used car, always register it with the manufacturer using your current contact details. That way, you won't miss any recall notices.

What to do if your vehicle has been recalled

The recall letter will explain the nature of the defect, the repairs needed, and any precautions to take while operating the vehicle. The manufacturer bears the total cost of getting your car road-ready again.

Sometimes, you can resolve the issue yourself, as in the case of a software update for high-tech vehicles, such as Tesla models. However, complex repairs require a visit to a dealership or auto shop.

In the latter case, inquire how long it will take to correct the issue. Delays may happen due to extensive work or part shortages. If faced with a long wait, you may have to arrange alternative transportation.

Check with the automaker for a complimentary rental or review your insurance policy for rental coverage options.

How does a vehicle recall affect your auto insurance?

According to Andrew Bartucci, director of external communications at Insurance Bureau in Canada (IBC) a recall won't impact your car insurance rate. This is because any faulty components affecting your car stems from the manufacturer, who is legally obliged to fix them.

Since recalls don't influence your risk level as a driver, your insurance provider won't penalize you by hiking your premium. When pricing their policies, car insurance companies may account for safety defects, so your premium may gradually rise. However, this is rare, only occurring in cases where a vehicle's recall has known long-term safety repercussions.

In the case that a driver ignores a recall, and it leads to an accident, the recall and the circumstance of the incident makes determining your fault a little less simple.

“A few different things could happen,” Bartucci says. “You could be considered at fault for a collision and have it on your insurance record, which could influence future premiums.”

If a recall renders your vehicle undrivable and you ignore it and eventually get into an accident, your claim could be denied due to negligence. Additionally, if the vehicle causes damage to someone else's property, such as a fire damaging a parking garage, you may be liable for the resulting damages.

The bottom line on vehicle recalls in Canada

In Canada, manufacturers must advise drivers of performance and safety issues affecting their vehicles in Canada. However, as a driver, it's your responsibility to take the necessary steps to get them fixed.

Disregarding recalls while getting behind the wheel can lead to serious injury for yourself and others. It can also result in your insurance provider rejecting your claim following an accident, which can prove costly.

The good news is that a recall itself won't increase your insurance premium, and your policy will remain intact if you comply and get your car repaired.