Canadian Underwriter

Length of car rental for collision claims keeps getting higher

January 31, 2023   by Alyssa DiSabatino

Man getting into a rental car after a collision claim

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Auto insurers can expect their policyholders’ average length of rental (LOR) for collision-related claims to reach 17.1 days — an increase of 4.3 days from the prior year and 0.6 days from Q3, Enterprise’s 2022 Q4 data shows. 

“While the year-over-year increase is significant, the quarter-over-quarter increase is telling as this is in line with historical LOR trending from Q3 to Q4 of pre-pandemic years,” Enterprise reported. 

In the event of a total loss, however, length of rental reaches an average of 25.5 days across all provinces, Enterprise says. This is an 8.1 day year-over-year increase (17.4 in 2021 Q4).  

Newfoundland & Labrador was the only province under 22 days for a total loss, while PEI reached 29.8 days. 

Increasingly, longer LOR has been exacerbated by supply chain disruptions, parts delays, collision repair backlogs, and technician shortages, Enterprise explained in its report. 

“Average total labor hours [in Canada] increased to 21.78 hours, an increase of 0.61 labor hours from Q4 2021,” Ryan Mandell, director of claims performance for Mitchell International, a claims management software company, shared with Enterprise.  

“This is significant as we expect there to continue to be significant development of this number as only about 60% of supplements expected have been accounted for thus far,” Mandell told Enterprise. “Luxury vehicles continue to increase as a percentage of the repairable car parc [from the French term ‘parc de véhicules’ referring to the number of vehicles within a geographic location], accounting for 17.91% in Q4 2022 compared to 17.77% in Q4 2021. Tesla repairable market share increased from 1.04% in Q4 2021 to 1.55% in Q4 2022.” 

However, the average LOR is lower for drivable repairs but even higher for non-drivable repairs. 

For rentals associated with a drivable repair, LOR across all provinces was about 12.4 days (a 2.4 day increase over the previous year).  

Ontario had the highest drivable repair increase LOR at 14.5 days (about 3 days more than the year previous). On the lower end, New Brunswick had a drivable LOR of 10.0 days, with PEI (10.2), Quebec (10.4) and Newfoundland & Labrador (10.4) closely following. 

However, rentals associated with non-drivable claims had the largest impact on Canada’s overall results. 

For non-drivable repairs, insurers can expect LOR to last a full month (31 days). This is a 10.3-day increase from just one year ago.  

Ontario had the highest LOR at 34.2 days, followed by Atlantic Canada, namely, Nova Scotia and PEI. Quebec’s LOR was on the lower end at 24.9 days. 

Plus, Canadian LOR results have now reached levels seen in the US., Enterprise reported. In fact, Canada’s non-drivable LOR actually exceeds the U.S. (27.1 days in 2022 Q4).  


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