How Claims Impact Your Auto Insurance Rates

Filing a claim on your car insurance policy is a sure way to raise your rates. Of course, a few exceptions do exist, but they are few and far between. By and large, if you file a claim, you can be almost certain that your car insurance premiums will rise in the near future. Contrary to popular belief, insurers do not charge higher rates after an accident claim to recoup what they lost in paying out your settlement. Rather, insurers have found that policyholders who have recently filed a claim also represent an elevated future claims risk, which is why they pay more for coverage.

At-Fault Accidents

If your car insurance claim is the result of an accident for which you were at fault, it’s a safe bet that your auto insurance rates will increase and you will have more trouble finding affordable car insurance in the future. The only way you might escape a premium hike is if your auto insurer offers some type of accident-forgiveness program. The details of such programs vary by carrier, but they usually “forgive” the first accident you have, meaning it will not affect your rates. While some carriers will only forgive not-at-fault accidents, a growing number of major carriers will also forgive first-time, at-fault accidents if the driver has an otherwise spotless record.

Not-at-Fault Accidents

Unless you’re the beneficiary of an accident forgiveness program like the one described above, you can count on accidents that were not your fault to raise your car insurance rates as well. Insurers are primarily concerned with what an accident costs them, not who was at fault. So if someone else causes an accident and you have to file a claim because of it, you will pay the price in your future premiums.

When Rate Increases Take Effect

Initially, you might think you got away with your auto insurance claim without a concomitant rate increase because your premiums remain the same immediately after the incident. Unfortunately, that is not the case. Car insurers wait until your policy is up for renewal to raise your rates. Until your current coverage reaches its expiration date, you will continue paying the same rates. Watch for the spike, however, as soon as you renew your car insurance coverage. Also remember that most states permit auto insurers to raise rates due to an accident for three years or more. That period begins when the rate increase goes into effect, not when the accident occurs.