How does my claim history affect my insurance rate?
When you are buying auto insurance, your driving record is one of the main things insurance companies consider when determining your insurance rate. The more driving risk you have demonstrated in the past, the higher your premiums will be. As such, it makes perfect sense that insurance companies might reevaluate your rate following a claim or other driving incidents (like moving violations) that are your fault, or even when you are not at fault in some cases.
When reassessing your insurance rate, practices vary depending on your state laws and your insurance provider. In general, an insurance company will raise your premium by a certain percentage if you make a claim above a specified amount due to an incident which you were primarily responsible for.
On average, car insurance premiums go up by 31% after one at-fault accident claim with more than $2,000 in damage. The rate could be higher or lower depending on your unique situation.
When shopping for insurance, it's always a good idea to check different insurers' rules regarding rate increases so that you get the best deal possible.
What's the effect of an at-fault accident on your insurance premiums?
Most insurance companies raise your premiums after an at-fault accident. One at-fault accident may raise your premiums anywhere from 12-80% or not at all, depending on the severity. Some insurers may let one minor accident slide, but your rate may still go up as a result of losing your good driver discount.
What every driver should avoid is a second at-fault accident claim. This will make your insurance premiums skyrocket by 70-180% depending on your location, severity of the accidents, and the company.
What if you are not at fault?
Most insurers do not raise your premiums if it's your first incident and you are not at fault. Whether your rate goes up or not in a not-at-fault accident depends on your state laws and your insurance provider. Most companies will let one accident slide, but if you are involved in multiple accidents, even when you were not at fault in any of them, your insurance company may increase your rates or refuse to renew your policy.
How insurance companies calculate a rate increase after a claim
Insurance companies employ a surcharge schedule when raising premiums after claims. Each company sets its own schedule as long as the state approves it. The schedule determines how much the rate hike will be.
Most insurance companies use standards set by the Insurance Services Office, which allows for a 20-40% increase in the insurer's base rate.
When not to file a claim
Keeping small claims to yourself can help prevent future rate increases. Most industry experts agree that you should not file a claim if the repair costs are lower than or just above the deductible amount. However, it's always best to report any accidents to your insurance company particularly if your policy requires it or if other people are involved in the accident.
Is the rate hike permanent?
The good news is that premium increases are not permanent. They usually last for three to five years, after which they drop to the pre-claim levels.