More pothole claims, less repairs: How it affects the industry

Potholes, the scourge of Canada’s roads for generations, continue to wreak havoc on claims costs.

In Toronto alone, pothole-related compensation claims increased 47% year-over-year to 1,194 as of Feb. 23, according to statements to the media from the City of Toronto. At the same time, pothole repairs were down about 35% to 23,099 as of Feb. 26 from 33,130, data from the city show.

Toronto’s weather has brought recent large fluctuations in temperature — exactly what causes potholes. Water seeps into the cracks of cement, freezes and worsens the cracks, then thaws, leaving behind large holes and loose debris, Rates.ca explains.

To make matters worse, city crews have had to prioritize snow clearance over road repair, media reports say.

While Toronto’s pothole problem is making news, the high volume of claims this winter is also hitting smaller communities, says Jesica Ryzynski, a claims specialist at Mitch Insurance. In these communities, repair shops are overwhelmed and it’s not practical for vehicle owners to drive an hour away to another shop.

“They’ve got to stick with the shop they’ve got, and so then we [see] issues of running out of coverage on the rental limit, or potentially not being able to find a rental,” she says.

“There’s smaller communities where we’ve got only maybe one or two shops that are able to do the work. And, in some cases clients in those areas have difficulty sourcing rental vehicles, because the volume of repairs is stretching repair shops’ timelines.”

The pothole plague has been particularly unkind to electric vehicles, Ryzynski adds, because the impacts can damage the batteries – which can cost in the tens of thousands of dollars to replace.

Coverage considerations

The fluctuating weather and slower pace of pothole repairs means things could get a lot worse for Toronto drivers before it gets better. Especially if drivers don’t carry collision or all-perils coverage.

As more drivers deal with damage before roads are fixed, Rates.ca insurance expert Daniel Ivans says many underestimate how coverage choices, deductibles and strict municipal filing deadlines can determine whether they recover their losses or absorb the repair costs themselves. 

If a vehicle is damaged by a pothole, it typically falls under the collision portion of a policy, Ivans explains. Collision is what covers single-vehicle impacts, including hitting a pothole, while comprehensive applies to things like fire, theft, vandalism and glass. All-perils is simply a broader package that combines both collision and comprehensive coverage.

“These coverages aren’t mandatory in most provinces, so if a driver doesn’t carry collision or all‑perils, they would likely be responsible for the repair themselves,” Ivans warns. 

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Beyond understanding what coverage applies, Ivans says drivers should consider three practical factors before deciding what to do next: 

• The deductible versus the repair bill — Even with coverage, the deductible applies first. If a deductible is $1,000 and repairs total $1,400, payout may be limited. The size of the repair estimate relative to the deductible can influence how a driver proceeds, Ivans says.
• The municipal route is possible, but narrow — Drivers can pursue compensation from the city, but reimbursement depends on whether the city met its Minimum Maintenance Standards for Highways in the City of Toronto. If the pothole falls within the allowable standards for that class of road, the city is not responsible for the damage. Claims must typically be filed within 10 days. But the city says it’s experiencing higher than normal claims volume due to the severe winter weather. “As a result, the 90-day target undertaken for resolution of all property damage claims may not be achieved.”
• Documentation and timing matter — Photos of the pothole, precise location details and prompt inspections are important. Suspension or alignment damage may not be immediately visible, which can complicate both insurance and municipal claims. 

“With pothole-related claims rising, drivers generally have three paths,” Ivans says. “They can file through insurance if they carry the right coverage, pursue a municipal claim, or cover the repair costs themselves.

“The outcome often comes down to the policy details, the deductible and whether the city met its required maintenance standards, which would mean it is not responsible for the damage.” 

Jason Contant

Jason has been an award-winning journalist with Canadian Underwriter for more than a decade, including the past three years as associate editor and, before that, as digital editor for seven years.