Exchange rates on a screen.
Exchange rates on a screen.

How current exchange rates can affect trucking insurance claims

The strengthening of the U.S. economy and the exchange rate between the U.S. Dollar (USD) and Canadian Dollar (CAD) has changed the flow of business in the past year and seems likely to continue. An expensive USD may cause Canadian trucking companies shipping to the U.S. to experience an increased cost of doing business and here’s why:

Higher litigation costs and settlements

As trucking companies increase their operational radius, they are also increasing their risks. In the event of an accident while inside the U.S., litigation costs can be significantly higher than in Canada. Especially when companies are at fault or act negligently, as juries may inflate damages in such cases. In some jurisdictions there are no caps on losses, which can cause settlement amounts to be substantially higher.

The exchange rate would also inflate the settlement amount by up to 30% or more, based on average exchange rates seen in 2015. In jurisdictions that have uncapped losses, these costs could be extremely high.

Higher operational costs

Long haul trips into the U.S. mean more wear and tear on vehicles, equipment and parts that require replacements and upgrades. Purchasing parts while inside the U.S. or from suppliers based in the U.S. may also see increased costs due to the impact of the exchange rate. Businesses should review the increased costs and adjust their deductibles accordingly.

Impact on your insurance deductible

Policy limits are in CAD based on the province where it is issued, but losses occurring in the U.S. are paid out in USD. This can mean two things:


  • Your losses are magnified in USD. For instance, if you have a loss of $1 million USD, it is now over $1.3 million CAD based on 2015’s average exchange rate!

  • Exchange rates also affect your policy limits directly. For example, if you have a liability limit of $5 million CAD, it can now become approximately $3.75 million.



Thus, we suggest you review your policy deductibles to ensure you’re sufficiently covered in the unlikely event of a loss.

This blog is provided for information only and is not a substitute for professional advice. We make no representations or warranties regarding the accuracy or completeness of the information and will not be responsible for any loss arising out of reliance on the information.

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