Auto Insurance Claims: Second Time's The Charm?

Filing multiple auto insurance claims can have several consequences, including increased insurance rates, policy cancellation, or non-renewal. Insurers typically consider claims over a multi-year period, so filing two claims within a short time frame can result in higher premiums or non-renewal of the policy. It is important to note that insurers may view multiple claims within a given period similarly, regardless of the time lapse between them. Additionally, while insurers cannot cancel policies mid-term, they may choose not to renew if multiple claims have been made.

Rates may increase

Making multiple car insurance claims can lead to increased insurance rates. This is true even if the claims are spread out over a few years. 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. This increase is usually higher for collision claims than for comprehensive claims. Collision claims cover incidents that occur as a result of the insured driver's actions, such as colliding with a fixed object or another vehicle. Comprehensive coverage, on the other hand, is designed to cover damage that occurs outside of the insured driver's control, such as vandalism or storm damage.

On average, an at-fault collision claim raises insurance rates by $64 per month, or $384 per six-month policy period. However, this may vary depending on your state, insurer, and specific circumstances. It's important to note that even if you switch to a new auto insurer, your rate will likely still increase due to being seen as a higher-risk driver.

In addition to rate increases, making multiple claims can also result in your policy being cancelled or not renewed. While an insurer can't cancel your policy mid-term if you've made multiple claims, they may choose not to renew your policy when it reaches the end of its term. Therefore, it's important to be cautious when considering filing a claim and to use your insurance coverage wisely.

Policy cancellation or non-renewal

Cancellation can occur during the first 60 days of a new policy for almost any reason. After 60 days, or in the case of a renewal policy, insurers can only cancel a policy for specific reasons, such as non-payment of premiums, fraud or misrepresentation, violations of the policy terms and conditions, or failure to disclose relevant information such as accidents or traffic violations. Insurers are typically required to provide advance notice of cancellation, usually between 10 and 30 days, and must state the reason(s) for termination.

Non-renewal, on the other hand, occurs when an insurance company decides not to renew your policy at the end of the coverage period. This can happen through no fault of your own, such as the insurer reducing its number of customers in your area, or for reasons such as late payments, fraud, or multiple moving violations or accidents. Like cancellation, insurers are generally required to provide advance notice of non-renewal, typically between 10 and 75 days, and must specify the reason(s) for non-renewal.

It's important to note that policy cancellation is generally considered more serious than non-renewal and may result in higher car insurance rates or difficulty finding a new insurance policy. In contrast, non-renewal usually does not directly affect insurance rates when purchasing a new policy.

Claims over a multi-year period

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.

If you've made multiple car accident claims during a given period, it counts as having multiple claims. If one of the claims is still unresolved and the insurance company has not yet paid the claim, they still consider you to have multiple claims. It doesn't matter how much time passes between claims if they all occurred during that given period. Whether you get into two car accidents in one day, two car accidents in three months, or two accidents spread two and a half years apart, your insurer may view these the same way.

If you have two mishaps with your car during a tight timeframe, it is most likely not possible to group them into one claim and avoid filing multiple claims. For example, if you’re involved in a fender bender one day and a rock cracks your windshield a few days later, you'll need to file separate claims.

If you file several claims during a short time, an insurer can increase your rate or may choose not to renew your car insurance policy when you reach the end of your term. Even if you switch to a new auto insurer, your rate will likely increase because your new insurer may view you as a higher risk for an accident.

The number of claims you have filed in the last few years matters, as does the type of claim filed. For instance, a claim on an accident you didn’t cause may not be treated as severely as one for an at-fault accident that you did cause.

Claim types: collision and comprehensive

When it comes to auto insurance, there are two main types of claims: collision and comprehensive. Each covers different types of incidents and damage to your vehicle.

Collision insurance covers damage to your vehicle resulting from a collision with another vehicle or object. This includes accidents involving other cars, single-car rollovers, and collisions with stationary objects like guardrails or telephone poles. If your car needs repairs or a full replacement after such an incident, collision insurance will have you covered.

On the other hand, comprehensive insurance covers damage to your vehicle from non-collision incidents. This includes unexpected events like theft, vandalism, fire, hail, or natural disasters. For example, if a tree falls on your car during a storm or a deer jumps into your path on a country road, comprehensive insurance will help cover the costs.

Both types of coverage are optional and not required by state law. However, they are typically required if you finance or lease your vehicle. While it's not mandatory, having both collision and comprehensive insurance is highly recommended for drivers, especially those in high-risk areas or with high-value cars. This way, no matter what type of incident occurs, you're protected and won't have to pay for costly repairs or replacements out of pocket.

When it comes to filing multiple claims, regardless of the type, it's important to note that insurance companies may view this negatively. Even if the claims are spread out over a period of time, insurers may increase your rates or choose not to renew your policy. Therefore, it's essential to weigh the benefits of filing a claim against the potential impact on your insurance costs in the future.

Compare insurance options

When comparing insurance options, it's important to consider a range of factors that can influence the cost and coverage of your policy. Here are some key points to keep in mind:

Personal Factors

Your age, gender, driving record, credit history, and location can all impact your insurance rates. Younger and less experienced drivers tend to pay higher premiums due to their higher risk profile. A poor credit score can also increase your rates, as insurers may view you as a higher financial risk. Additionally, your location can affect your rates, with urban areas typically associated with higher claim frequencies, resulting in more expensive policies.

Vehicle Type

The type of vehicle you own also plays a significant role in determining insurance costs. Insuring a luxury or high-end vehicle will generally be more expensive than a standard sedan, as the replacement costs are typically higher. Certain safety and anti-theft features equipped in your car can help reduce your insurance premiums, as they lower the risk of accidents or theft.

Driving Record

Your driving history is a crucial factor in setting insurance rates. Traffic violations, accidents, and previous insurance claims will likely lead to higher premiums. Insurance companies typically review your driving record from the last three to five years, depending on your state's regulations. If you have multiple claims within a short period, insurers may view you as a higher-risk driver, resulting in increased rates or even non-renewal of your policy.

Insurance History

When comparing insurance options, consider the number of claims you've made across different policies. Insurers typically view multiple claims within a multi-year period unfavourably, even if they are unrelated. While an insurer cannot cancel your policy mid-term for multiple claims, they may choose not to renew it. Switching to a new insurer after multiple claims may also result in higher rates, as your new insurer may consider you a higher-risk client.

Coverage Options and Discounts

When comparing insurance options, evaluate the coverage options and discounts offered by different insurers. Determine the level of coverage you need, such as liability, collision, and comprehensive insurance. Look for insurers that provide accident forgiveness, good student discounts, or low-mileage discounts if applicable to your situation.

Comparison Shopping

To find the best insurance option, it's essential to compare quotes from multiple insurers. Insurance companies use varying methods to calculate premiums, so comparing rates will help you secure the most competitive price for your profile. Utilize trusted insurance comparison sites, such as The Zebra, to obtain quotes from numerous companies simultaneously. Remember to provide accurate and detailed information when requesting quotes to ensure you're getting like-for-like comparisons.

Frequently asked questions