How does an auto insurance claim affect your policy?

by Guest » Thu Jan 10, 2008 05:47 pm

When you make a claim on your auto insurance policy, the insurance company begins to consider you as potentially risky. Hence, a claim does, in normal circumstances, increase your auto policy premiums.

Why does a claim increase your policy premiums?

When you make a claim after an accident, your insurer may have to pay for:

Medical treatment for you and your passengers (if any)
Repair damage to your car or any other property
Your lost wages and any other damages

If it happens that the other party involved in the accident is uninsured, your own insurance company will have to bear the expenses and this can be quite expensive. After the insurance company pays you against a claim, they will try to recover the amount paid to you, but in most cases they won't be able to get back the entire sum. So, when they renew your policy, they will ask you to pay higher premiums to counter any future risk of a claim.

Are there other factors that affect auto policy premiums?

Claims alone don't trigger increase in insurance rates, there are also few other factors that may influence your insurance premium. Some of the factors may be directly related to you and some may not be.

Here are few other common reasons why your premiums might go up:

Receiving a traffic ticket: Your receiving a ticket, may not pose any threat to the insurer, but that definitely makes you a risk. Tickets for traffic violations reflect carelessness in your driving and hence insurance companies see you as higher risk which means higher rates for you.
Too many claims paid by the insurance company: You may not have been the claimant, but the insurance company might have paid a lot of money over claims made by other policy holders. In such a case too, your premiums might go up. You may not have anything to do with this, but since there had been too many claims made by other policyholders, the insurance company may decide to increase the rates of every policy holder in their company.
Adding a new driver to your policy: Each time you add a new driver to your existing policy, your rates will go up. Irrespective of what age the driver is, or the driving record, your auto rates will go up. If the new driver is a teenager or someone with a not so good driving record, companies make greater increase in rates.

Does a claim for PIP coverage in no-fault state affect premiums?

Claiming Personal Injury Protection (PIP) or First Party Benefits in a no-fault state does not increase your auto insurance rates. If you make a claim, your PIP coverage will compensate up to the coverage limit after which the additional medical bills can be transferred to your health insurance.

One thing to remember here is to not make your health insurance a primary means. If you do make it primary, then in case of any medical bills, your health insurance will kick in before PIP, even in an auto accident.

How can you avoid an increase in premium rates?

The best way to prevent an increase in premiums would be to avoid accidents and traffic tickets. But some companies offer policyholders an accident forgiveness program. These programs are designed such that you (policyholder) can be forgiven for minor accidents up to a certain number of times and your insurance rates will not increase. However, there are limitations to the number of times or the frequency of accidents beyond which your rates will go up.

Insurers have excluded major accidents from the program and if you have a claim for a major accident, you may be disqualified for the program for as long as it reflects on your policy. Again, tickets for Driving under Influence (DUI) may also prevent you from qualifying for such a program. So, if you want to qualify for this program you need to have a good driving history with no claims for a major accident.

I live in Pennsylvania, which is under a 'No Fault' system. What happened was me, along with 3 friends were involved in a car accident;my friend was the driver. A car hit us from the side, hitting the front of our car, and we had the green light. The driver of the other car was technically at fault, and now the real problem I'm facing is this: We all went to the ER to get checked on, the bill comes to us, my friend tells me he's claimed us all into his insurance for medical coverage, BUT his insurance tells him that because it's a no-fault law, we are each suppose to claim the accident ourselves to our own insurance/parents insurance...which doesn't make sense to me at all. His company is Allstate, and I've talked to the representative and did my research. According to the representative, if I claim with my dad's auto insurance, the bill will be taken care of and his premium will not rise, but where's the logic? Why would my dad have to claim me if it had nothing to do with me when the responsibility is on my friend? Plus, he(dad) called his company and they told him his premium would rise. So now i am stuck, and unsure of what to do. The bill itself is $800.00 and there is no reason why I should pay out of my own pocket or increase my dads premium because of this. Can anyone provide any help as to what I should do..? Why isn't the driver allowed to claim all of us in his medical coverage? Why do we each need to claim this separately to our own coverage when the driver is to be responsible? thanks for any comments

Total Comments: 49

Posted: Tue Apr 03, 2012 03:27 pm Post Subject: PIP claim in Texas--rate increase?

You stated that if you make a PIP claim in a "no fault" state that your premium does not increase. What if you are not in a "no fault" state--like Texas--does making a PIP claim in itself set you up for a rate increase?

Posted: Tue Apr 03, 2012 03:37 pm Post Subject:

The answer should still be no. But then, again, Texas is its own country.

Posted: Tue Apr 10, 2012 07:04 am Post Subject: Re:How does an auto insurance claim affect your policy?

Nice information and good article. Thanks for sharing.

Posted: Thu Jul 12, 2012 07:15 pm Post Subject: Car insurance premiums

I have had a small accident in that I have scratched and dented my car and scratched and slightly dented my lodger's car (misjudged space between them when reversing). I want to know, if I claim on my insurance, how much will my premium increase (percentage for instance)? I need to know this before deciding whether to claim on my insurance or pay privately for the repairs.

Posted: Thu Jul 12, 2012 11:24 pm Post Subject:

No one here can answer your question.

Posted: Sat Aug 25, 2012 03:50 pm Post Subject: Claims increases

I live in NYC and my car is too often damaged while parked. I have filed three cliams already this year for parking damage. Two were slightly under the 500.00 deductible (around 400.00). The other well above and GEICO paid me 1000.00 after the deductible. I lowered the deductible to 250.00 a few months back and got rammed again (an SUV no doubt) near the grill of my BMW 325i (a low front end). I could get the damage paid for (estimate might be 600.00) Should I file a claim or just pay the 250 myself? ( I know a good cheap autobody shop in Yonkers).
How many claims are too many?
How far back do insurance companies go back to raise your premiums.
Does it matter if they don't make a payout on a claim?
Could they reject my car as in a too risky place (NYC)?

Thanks for any insight you could provide.

Posted: Sat Aug 25, 2012 07:44 pm Post Subject:

How many claims are too many?

Your insurance company will let you know.

My question is this: If your deductible was $500, why would you make a claim for any lower amount of money? You are on the hook for all amounts below the deductible.

I could get the damage paid for (estimate might be 600.00) Should I file a claim or just pay the 250 myself? ( I know a good cheap autobody shop in Yonkers).

What does this mean? That with insurance the cost of the damage is $600, or without insurance it is $250? If that's true, then the "cheap autobody shop in Yonkers" is committing insurance fraud, and should be investigated by the state Superintendent of Insurance.

Does it matter if they don't make a payout on a claim?

No, it doesn't matter. Your premiums are a reflection of your risk exposure, not your claims payments (or non-payments).

Could they reject my car as in a too risky place

Of course.

Posted: Thu Feb 21, 2013 03:20 pm Post Subject: other person now claims body injury when was ok at seen acci

i got in a slight accident a week ago. everybody ok at seen. no tickets issues. because we both at fault. now man trying bring up a claim of body injuryies he was fine laguhing and jokes at seen after accident. what do i need to do? my insrance company slow resonpeing i just dont know what to do. :?: :?:

Posted: Fri Feb 22, 2013 12:35 am Post Subject:

what do i need to do? my insrance company slow resonpeing i just dont know what to do

First, see my sig.

You need to allow your carrier to address the claim.