Navigating The Claims Conundrum: Securing Auto Insurance With A History Of Multiple Claims

If you've had the misfortune of being involved in multiple car accidents, you may be wondering how this will impact your insurance. Making multiple car insurance claims can have several consequences, including higher insurance rates, non-renewal of your policy, or even policy cancellation. The impact of multiple claims depends on factors such as the type of claims, the number of claims, and the time frame in which they occur.

In general, any claims made within a three-year period are considered multiple claims and can lead to an increase in your insurance rates. At-fault claims, where you are found to be responsible for the accident, are particularly damaging and can result in your insurance carrier choosing not to renew your policy. On the other hand, comprehensive claims, which are outside of your control, such as vandalism or natural events, may not affect your rates unless you file more than three within three years.

Additionally, multiple claims close together may affect your deductible. For example, if you have a cracked windshield and then a tree limb falls on your car, you may have to pay two deductibles if your policy has a comprehensive coverage deductible.

To avoid penalties for multiple claims, it's advisable to drive with caution, practice defensive driving, and consider paying for minor claims out of pocket to avoid being labelled as a high-risk driver.

How multiple claims are defined

Multiple claims are typically defined as two or more claims filed within a three-year period. However, this definition can vary depending on the insurance company and state regulations. Some insurance companies may consider multiple claims to be any two claims filed within a six-month or two-year period. It is important to note that the nature and type of claims, such as at-fault or comprehensive claims, also play a significant role in determining the impact on insurance rates and policy renewal.

At-fault claims are generally considered the most damaging, as they indicate that the insured driver was responsible for the accident. These claims can lead to non-renewal of the policy or an increase in insurance rates, even if the accidents occurred years apart. Comprehensive claims, on the other hand, are usually the result of events outside the driver's control, such as vandalism, theft, or natural disasters. While multiple comprehensive claims may not always affect insurance rates, filing more than three within a three-year period can lead to higher insurance rates or non-renewal.

The impact of multiple claims on insurance rates and policy renewal depends on the specific insurance company and state regulations. Some insurance companies may categorise drivers with multiple at-fault accidents as high-risk, making it challenging to find an insurer willing to offer coverage. Additionally, insurers may choose not to renew a policy if there are multiple claims, even if they are not at-fault, as insurance companies can legally decide not to renew for any reason.

It is worth noting that the definition of multiple claims can vary, and it is essential to review your insurance policy and consult with a licensed insurance professional to understand how multiple claims may affect your specific situation.

The impact of multiple claims on insurance rates

Making multiple claims on your car insurance can have a significant impact on your insurance rates and coverage. The exact increase in your insurance rate will depend on the type of accident, the number of claims, the nature of the claims, and your insurer.

In general, insurance companies consider multiple claims to be two or more claims filed within a three-year period. This timeframe may vary depending on the insurer and the state. During this period, whether the claims are filed within a short time or spread out over several years, they will still be considered multiple claims.

At-fault claims are considered the most damaging to your insurance rates. These are claims that are a result of accidents caused by you. Two at-fault claims within three years may result in non-renewal of your policy, and you may be considered a high-risk driver by other insurance companies, leading to higher insurance rates.

On the other hand, comprehensive claims, which are the result of events outside of your control, such as vandalism, theft, or natural disasters, may not always affect your insurance rates. However, filing multiple comprehensive claims within a short period can still lead to an increase in your insurance rate or non-renewal of your policy.

It is important to note that even if you are not at fault in an accident, your insurance rates may still increase, especially if you have a history of multiple claims. Additionally, insurers can legally choose not to renew your policy for any reason, except for discriminatory factors such as race, gender, or disability.

To mitigate the impact of multiple claims, it is advisable to compare insurance options from different companies, as pricing policies vary. It is also essential to be cautious when filing future claims and to consider the impact on your insurance costs.

Comprehensive claims

Comprehensive insurance is an optional addition to most car insurance policies. It covers damage caused by or related to theft, animals, vandalism, and weather. It does not cover damage caused by colliding with another vehicle or object; this is covered by collision insurance.

Comprehensive insurance is useful if you don't have enough cash to cover unexpected repair or replacement costs. It's also required if you're leasing or financing your vehicle. However, it becomes less useful the older your car is, as it only reimburses you for repairs up to the actual cash value of your car, minus your deductible. So, if your car isn't worth much, it may not make financial sense to keep this coverage.

Comprehensive insurance covers:

• Weather events, such as hail, floods, or tornadoes
• Falling objects, such as tree limbs
• Car theft and broken windows
• Vandalism or civil disobedience, such as a riot

It does not cover:

• Damage or injuries caused to others while driving
• Your own injuries after an accident
• Damage to your car from a collision with another driver or object
• Personal belongings inside your car
• Damage from potholes
• Normal wear and tear

On average, a comprehensive claim increases auto insurance premiums by $5 to $6 per month. Two comprehensive claims raise car insurance premiums by $13 per month. Filing multiple comprehensive claims will raise your insurance rates by $82 over a standard six-month policy, on average.

If you have multiple comprehensive claims, consider USAA, State Farm, or Nationwide when comparing rates.

At-fault claims

In the US, two at-fault claims within three years are grounds for non-renewal with many insurance companies. Since your driving record follows you, your next insurance company will also consider you high-risk and your insurance rates will reflect this.

On average, an at-fault collision claim raises insurance rates by $64 per month, or $384 per six-month policy period. USAA provides the cheapest average rates for drivers with an at-fault accident.

In addition, insurers typically look at claims over a multi-year period. So, whether you've filed two insurance claims in six months or two claims in two years, you'll be seen as having multiple car insurance claims. When you've had multiple claims, your rate may increase, even if you weren't at fault in the accident (depending on your state and your insurer). While an insurer can't cancel your policy mid-term if you've made multiple claims, they may choose not to renew your policy.

To lessen the chance of causing an accident that requires filing an at-fault claim, practice attentive driving, stay off the roads in bad weather, and keep your car in good mechanical condition.

Policy cancellation and non-renewal

Policy Cancellation

Policy cancellation occurs during the term of the policy or when the policy term is ending. Insurance companies typically cannot cancel a policy that has been in force for more than 60 days, except for specific reasons such as:

• Failure to pay the premium
• Committing fraud or making serious misrepresentations on the insurance application
• Having your driver's license revoked or suspended
• Being convicted of a DUI

Policy Non-Renewal

Policy non-renewal happens when the insurance company or the policyholder decides not to renew the policy when it expires. Non-renewal can occur through no fault of the policyholder. For example, the insurer may decide to reduce its number of customers in a particular area. A non-renewal can also be due to the policyholder's actions, such as engaging in high-risk behaviours like drunk driving.

In the case of multiple auto insurance claims, policy non-renewal is more likely than cancellation. This is because insurers typically cannot cancel a policy mid-term, even if the policyholder has made multiple claims. However, they may choose not to renew the policy when it reaches the end of its term.

Regardless of the reason for non-renewal, insurance companies must provide a certain number of days' notice and explain the reason for non-renewal before dropping the policy. The exact timeframes and rules depend on the state in which the policyholder lives.

Frequently asked questions