Claiming Auto Insurance: A Step-By-Step Guide To Premiums

Auto insurance is a contract between you and your provider. Your provider promises to provide financial coverage after an accident or other emergency, and in exchange, you agree to pay a premium. When you file a claim, your insurance company will investigate it to ensure its legitimacy. If your provider approves your claim, they will send a check to cover repairs. However, filing a claim will likely increase your insurance premium, as insurance companies calculate costs based on risk, and drivers who file claims are considered a higher risk. The exact amount by which your rates will increase is difficult to predict, but it depends on factors such as the severity of the accident, your driving history, and the cost of the claim.

How to lower your premium after an accident

There are several ways to lower your premium after an accident:

Seek Coverage Elsewhere

According to The Zebra, auto insurance rates increase by about $767, or 50%, after an accident. This is because insurance companies see you as a higher risk. This added risk can result in more than $2000 in additional insurance expenses overall as the accident will remain on your record for up to five years. To avoid this, consider switching insurers after an accident. You may be able to find a better price with a different firm.

Update Your Coverage

Changing the limits and terms of your auto insurance policy after an accident can also save you money. You can increase your deductible to achieve a lower monthly payment on your insurance premium. Just make sure you don't cut your coverage so much that you will be left with significant out-of-pocket costs if you cause an accident.

Go to Driving School

Many insurance companies will discount your rates if you complete a defensive driving or driver education course. Defensive driving classes cover road safety techniques, ways to avoid accidents, and traffic laws in your state. According to Car Insurance Comparison, parents can save about 10 to 20% on their auto insurance premiums when teens on their policy take a drivers education course as insurers associate the completion of defensive driving classes with lower accident risk.

Look for Discount Programs

There are many types of discounts for auto insurance customers. These include safe driving discounts, membership discounts, anti-theft and safety discounts, defensive driver education discounts, paperless billing discounts, upfront and auto-payment discounts, and multiple policy discounts.

Improve Your Credit

Most states allow car insurance companies to consider your credit-based insurance score when determining rates. Taking steps to improve your credit, like paying bills on time and reducing your overall debt, can help lower your premium over time.

Raise Your Deductible

The higher your deductibles on comprehensive and collision coverage, the lower your premium will typically be. However, keep in mind that if you raise your deductible, your out-of-pocket expenses will be higher if you need to file a claim.

Shop Around

Comparing quotes from different car insurance companies may help ensure you're getting the best rate for your current circumstances. It may be difficult to find a car insurance policy that offers the same coverage at the same price you were paying prior to an at-fault accident, but other carriers may have discounts that are better suited to your needs.

Update Your Coverage Choices

If you need to lower your insurance premium, you could consider changing your coverage options. Reducing coverage you no longer need could help you save substantially. Keep in mind that you will still need to maintain your state’s minimum required coverage levels, and if you have a loan or lease, you’re likely required to keep full coverage on your vehicle.

Consider a Different Car

The make and model of every vehicle are rated differently by insurance companies, and it costs more to insure more expensive vehicles. If you need to cut down the cost of your car insurance policy, consider getting a vehicle that is cheaper to insure.

What to do if you're not at fault

If you've been in a car accident and believe it wasn't your fault, there are several steps you should take to ensure your safety, protect your rights, and establish fault. Here's what to do if you're not at fault:

Immediately After the Accident:

• Ensure your safety and the safety of others. Move yourself and your vehicle to the side of the road if possible.
• Call emergency services if anyone has been injured or if there is a risk of further danger.
• Contact the police to report the accident.
• Gather evidence: Exchange information with the other driver(s), including names, addresses, telephone numbers, driver's licenses, and license plate numbers.
• Obtain contact details of passengers and witnesses.
• Take photographs of the damage to the vehicles and the accident scene.
• Get the contact details of responding police officers and a copy of the accident report, if available.

After Leaving the Scene:

• Contact your insurance company as soon as possible, even if the accident seems minor. Your insurer can help you obtain compensation from the at-fault driver's insurer.
• Understand state laws and insurance coverage. In no-fault states, your own insurance company may cover medical bills and partial lost wages for minor crashes. In fault states, the at-fault driver's insurance company is typically responsible for compensation.
• Consider suing the other driver's insurance company if they deny responsibility or offer an insufficient settlement.
• Consult with an attorney to evaluate your car accident claim and help you fight for compensation.

Remember, it's important to remain calm and collected at the accident scene. Avoid admitting guilt or apologizing, as this could affect your insurance coverage and be used against you during a claim or lawsuit. Focus on gathering the necessary information and limit your conversations with the other party to what is necessary.

When to file a claim

When you should file a car insurance claim

• If anyone is injured, you need to file a claim, especially if there is a chance you will be found at fault. Medical expenses can add up, and failing to file a claim can leave you open to litigation.
• If fault is unclear in the collision, you'll need to file a claim so that your insurance provider can represent you.
• If your vehicle is deemed a significant or total loss, file a claim through your collision coverage or your property damage coverage through your liability insurance.
• If you've been injured in an accident.
• If your car needs to be repaired or replaced after sustaining damage.

When you might not need to file a claim

• If you damaged only your own vehicle and no one was injured, you might not need to file a claim.
• If the damage to another driver's property is minimal, you might not need to file a claim.
• If the cost of repairing your car is less than your deductible, there's no point in filing a claim.

How to prevent premium increases

Premiums are based on a variety of factors, some of which are within your control. Here are some ways to prevent premium increases:

• Maintain a good driving record: Safe drivers tend to have lower insurance rates. Avoid speeding, accidents, and other driving incidents to prove you're a less risky driver.
• Take a defensive driving course: In some states, taking an accredited defensive driving course can earn you an insurance discount. Even if it doesn't, it can help keep you safe on the road, reducing the likelihood of accidents or violations that could increase your premium.
• Shop around for insurance: Compare quotes from different insurance companies, as rates can vary. Getting multiple quotes can help you find a better deal and switch to a more affordable provider.
• Increase your deductible: A higher deductible often means a lower premium. Just be sure you can afford to pay the deductible amount in the event of an accident.
• Bundle your policies: Combining your auto insurance with other types of insurance, such as homeowners or renters insurance, from the same provider can often lead to a discount.
• Improve your credit score: In most states, your credit score is used in determining insurance rates. Taking steps to improve your credit score, such as paying bills on time and keeping credit card balances low, can help lower your premium.
• Take advantage of discounts: Insurance companies offer various discounts, such as for safe drivers, students, anti-theft features, and more. Review the discounts offered by your insurance company and ask if you qualify for any additional savings.
• Reduce coverage on older cars: As your car gets older, consider dropping comprehensive and collision coverage. These types of coverage may not be cost-effective if your car is worth less than 10 times the premium.
• Maintain your vehicle: Garaging your vehicle and keeping it in good condition can help prevent accidents and reduce the likelihood of repairs, which could lead to lower premiums.
• Pay your premium in full: Paying your annual premium upfront instead of in monthly installments may result in a discount.

By following these steps, you can help prevent premium increases and keep your auto insurance costs manageable.

How to choose a new insurer

Choosing a new insurer can be a challenging task, but there are several steps you can take to ensure you find the right one for your needs. Here are some tips on how to choose a new insurer:

• Determine your coverage needs: Understand the different types of insurance coverage available, such as collision coverage, comprehensive coverage, medical or personal injury protection, and uninsured/underinsured motorist coverage. Decide which types of coverage are most important to you and your situation.
• Review the financial health of insurers: It's important to choose an insurer that is financially stable and will be able to pay its claims. You can check independent ratings from companies like A.M. Best, Fitch, Moody's, and Standard & Poor's to evaluate their financial health.
• Compare quotes from multiple insurers: Get quotes from several insurers to find the best rates and coverage options for your needs. Be sure to compare the same types and amounts of coverage, as well as deductibles, across all carriers.
• Ask about discounts: Many insurance companies offer discounts for various reasons. For example, you may be eligible for a discount if you have a teen driver with good grades, low mileage, or if you have certain safety features in your vehicle.
• Research insurance providers: Look into the reputation and customer satisfaction levels of the insurance providers you're considering. Check online reviews, ratings from companies like J.D. Power and Consumer Reports, and complaints filed against the company. Also, ensure the company is licensed to operate in your state.
• Consider digital tools and customer resources: If having digital tools or access to customer resources is important to you, look for insurers that offer robust mobile apps, online portals, or other customer resources that meet your needs.
• Evaluate customer service: Choose an insurer with a reputation for attentive customer service and a fast claims process. You want an insurer that will be responsive and helpful when you need to file a claim.
• Shop around regularly: Insurance rates and coverage options can change over time, so it's a good idea to shop around and compare different insurers every couple of years or when your policy is up for renewal. This will help you get the best rates and ensure your coverage still meets your needs.

Frequently asked questions