How an Insurance Claim Affects Your Insurance Rate

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Automobile insurance is meant to protect drivers from paying for costly car accidents, theft or other problems. However, drivers are often afraid to file claims with their auto insurer because they worry their insurance rates will rise. 

Not every car insurance claim will trigger an automatic rate increase. There are many factors that predict whether your rates will go up after a claim, including your insurer, your policy, and what happened during the incident. This article will serve as a guide as to what factors in an insurance claim are related to an increase in an insurance rate. 

Circumstances of the Accident and Fault-vs.-No-Fault Insurance

How much the insurer has to pay will factor into whether you'll face a rate hike. An accident causing severe and expensive damage can cause you to pay more. But what if the other driver was at fault? The answer to that question varies.

Some insurance companies will not raise your rates if the other driver was at fault. However, in several states, there is a no-fault policy.* In no-fault states, you may see your insurance costs climb after an incident. What this means is in the event of an accident, you and the other party would collect from your own insurance companies. These laws also mean that there are certain restrictions to filing a personal injury claim against the other driver.

Driving History

Many car owners take pride in their spotless driving records, which have no accidents or moving violations. They fear a fender-bender will ruin all of that. Luckily, it's not entirely true that one incident will undo an excellent driving record. Insurance companies value safe driving and they may consider your record when deciding to raise your rates or not. Check if your insurance provider has a safe driver program, which will forgive drivers for their first incident or accident. You should also check to see if other providers can offer you a better deal, which you can do by simply adding your ZIP code above.

Even if you don't have a perfect driving record, you can take an online traffic school or defensive driving course to keep your rates low – many insurance companies even reward drivers who take these courses proactively, without getting a ticket or moving violation.

Other Claims: Theft or Damage

If you have coverage for theft or damage, then there's a good chance your premiums will increase after a claim. This is because the insurance company has no choice but to pay for the claim. There is no one else who can bear the costs.

Filing a Claim 

While you may be reluctant to file a claim after a collision or other incident, it's not always wise to bear the costs yourself. You pay premiums for a reason, and even with an increase, those costs are probably lower overall if you file a claim. In addition, some insurers will lower your premiums after a few years of a clean history.

Think about your insurance company and their policies when you file a claim. You'll want to tell your side of the story in as clear and factual way as possible. The insurance company will also investigate the incident themselves and determine what they will cover.

Any incident like this, whether a collision or theft, is a highly emotional situation. So, plan ahead how you will gather information. Much of the information is fairly basic and you don't need to be a police detective. Here's some of the information you'll want to give your insurance company:

  • Details about your insurance such as your policy ID number
  • Date/time of the accident or incident
  • Names, addresses and phones of everyone involved (drivers, passengers)
  • Drivers license and license plate information for all drivers

While drivers dread premium increases, they aren't always automatic. You have car insurance for a reason and not using it isn't always the best strategy in saving you money in the long run.