Auto Insurance Claims: Which Ones Make Your Rates Rise?

Auto insurance claims can have a significant impact on your rates and coverage. The impact varies depending on the type of claim, the amount, your insurance company, your claims history, your location, and whether you have accident forgiveness. At-fault accidents, in particular, can lead to substantial rate increases as insurance companies will view you as a high-risk driver. Comprehensive claims, such as vandalism or car theft, can also result in higher rates, although the increase is typically less than for at-fault accidents. It's important to note that even if an accident wasn't your fault, you may still experience a rate increase. Additionally, certain types of claims, such as dog bites or slip-and-fall incidents, can have a more significant impact on your rates and may even lead to coverage disqualification with some carriers. Understanding your insurance policy and the potential consequences of filing a claim is crucial for making informed decisions.

At-fault accidents

After an at-fault accident, your insurance rate will almost always go up unless your insurer offers accident forgiveness. The more severe the accident, the higher your premiums will be. This is because insurance companies will view you as a high-risk driver, and the higher your percentage of fault, the higher your rate increase.

Determining fault in an accident can be a complicated process. Claims adjusters review witness statements, police reports, photos of the accident, and other evidence to determine fault. In some cases, both drivers may share blame, which is known as comparative fault or shared liability.

If you are found to be at fault in an accident, it is important to contact your insurance company as soon as possible. They will investigate the accident and determine whether you are at fault. If you are, your insurance company will typically cover the damages up to your policy limit.

It's worth noting that even if you are not at fault in an accident, you may still experience a rate increase, especially if you have a history of claims or live in a no-fault state, where each party is responsible for their own medical bills.

Comprehensive claims

Comprehensive insurance covers property damage from events other than collisions, such as vandalism, car theft, inclement weather, or hitting an animal. While comprehensive claims are considered less impactful on your insurance rates than at-fault accidents, they can still lead to an increase in your premiums.

The Zebra's survey found that a comprehensive claim increases auto insurance premiums for a standard six-month policy by an average of $36. This translates to an average increase of $5 per month. However, the impact on your rates can vary depending on the insurance company and the specifics of your claim. For instance, Liberty Mutual's rates increased by $6 after a comprehensive claim, while Progressive's rates went up by $186.

The extent of the rate increase also depends on factors such as the type and amount of the claim, the availability of accident forgiveness, and your insurance company's policies. According to WalletHub, filing a claim will typically cause your auto insurance premiums to rise by an average of 3% to 32% for three to five years.

It's worth noting that even if you aren't at fault in the accident, insurance companies have the right to increase your rates after a comprehensive claim. This is because they determine premiums based on risk, and statistical data shows that drivers who have recently made a claim are more likely to file another in the future.

To mitigate the impact of comprehensive claims on your insurance rates, consider the following:

• Limit the number of claims you file.
• Before filing a claim, get an estimate of the damage and determine if the repair cost is below your deductible payout. If it is, you may be better off paying out of pocket to avoid a potential rate increase.
• Avoid paying for more coverage than necessary. Consider the value of your vehicle—if it's less than $4,000 to $5,000, you may want to drop comprehensive coverage as it could be costing you more in premiums than your car is worth.
• Use in-car monitoring to reduce your deductible and insurance rates. Many insurance companies offer this service to monitor driving habits and reward safe drivers with lower rates.

No-fault vs. at-fault states

No-fault insurance states require drivers to use their own Personal Injury Protection (PIP) insurance coverage, regardless of who caused the accident. This type of coverage pays for medical expenses, wage loss and, in some states, property damage after a car accident, regardless of who was at fault. In these states, drivers must purchase car insurance with PIP to cover their own injuries and losses. However, no-fault states may allow drivers who suffer severe injuries, as defined by state law, to sue the at-fault driver. The at-fault driver's insurance typically still pays for damage to the other driver's vehicle and property.

In at-fault states, which make up the majority of the US, the person who caused the accident is deemed responsible for paying for the damage. Their bodily injury (BI) liability insurance will pay for the other driver's medical expenses, and their property damage liability will cover the other driver's vehicle repairs. The amount of the payout will vary by state.

There are three types of negligence used to determine fault in a car accident:

• Pure contributory negligence: The insurance company will only reimburse a driver if they are completely blameless in the accident.
• Pure comparative negligence: A driver's payout is based on a certain percentage of fault.
• Modified comparative negligence: This also considers the proportion of a driver's fault but sets a threshold, usually 50% or 51%, above which the driver cannot claim.

The more auto insurance claims a person files, the more their car insurance will cost, even if the accident was not their fault. The most expensive rate hike will follow an at-fault accident, as insurance companies will see the driver as high-risk. However, rates will also increase following an accident that was not the policyholder's fault, unless they have accident forgiveness protection.

Accident forgiveness

To be eligible for accident forgiveness, drivers typically need to have a clean driving record for a certain period, usually five years. Some companies may also set additional requirements, such as having no violations or requiring drivers under 25 to have five consecutive clean years before their first accident is forgiven.

It's important to note that accident forgiveness may not be available in all states, and eligibility can vary by insurer. Additionally, accident forgiveness only applies to the first at-fault accident, and subsequent occurrences do not qualify.

Natural disasters

Comprehensive car insurance is the type of coverage that typically applies to natural disasters. It covers damage to your vehicle resulting from non-collision events, including weather-related incidents like floods, hail, and wildfires. It is important to note that comprehensive insurance is separate from liability insurance, which is mandated by state law and covers expenses related to injuries and property damage caused by the policyholder in a crash.

Insurers may view policyholders in areas prone to natural disasters as riskier customers, which can lead to higher premiums. Additionally, the increased frequency of natural disasters has resulted in higher claim payouts for insurers, who, in turn, pass on these costs to their customers in the form of higher rates.

The impact of natural disasters on auto insurance rates can be observed in several ways:

• Increased premiums: Policyholders in areas with a high risk of natural disasters may experience higher insurance rates. This is because insurers assess the likelihood of future claims and adjust their rates accordingly.
• Rate hikes after disasters: When natural disasters strike, insurers often face a surge in claims. To compensate for these payouts, they may raise rates for all policyholders, not just those directly affected by the disaster.
• Inclusion or exclusion of specific perils: In response to the increasing frequency and severity of extreme weather events, insurers are reevaluating their coverage policies. Some insurers may start excluding certain perils, such as floods or wildfires, from their standard policies, requiring policyholders to purchase separate endorsements or stand-alone coverage for these risks.
• Impact on high-risk areas: Areas with a history of natural disasters or those predicted to experience more frequent or severe events in the future may see more significant rate increases. This is because insurers are trying to mitigate their risk and reduce their exposure to potential claims.
• Changes in underwriting and rating practices: Insurers are adjusting their underwriting and rating practices to better capture the risk associated with different perils. This has resulted in decreased rates for some policyholders but significantly higher rates for others.

It is worth noting that not all insurers weigh natural disasters equally when determining rates. Some companies may be more forgiving of certain events or locations, while others may be more stringent. As a result, shopping around and comparing rates from different insurers can be beneficial for customers.

Additionally, policyholders can consider the following strategies to mitigate the impact of natural disasters on their auto insurance rates:

• Raising the deductible: Increasing the deductible, the amount paid out of pocket before the insurance company contributes, can lead to lower premiums. This is especially relevant for those in areas prone to natural disasters, as it allows them to self-insure for smaller incidents while still having coverage for more significant events.
• Utilizing discounts: Even with a claim history, policyholders can take advantage of various discounts offered by insurers, such as bundling or paperless billing, to help offset rate increases.
• Improving credit scores: In most states, insurance companies use credit scores as a factor in determining rates. Improving credit scores can help lower insurance rates, as individuals with better credit are statistically less likely to file claims.
• Safe driving: Maintaining a clean driving record, free of accidents and violations, can positively impact insurance rates over time.

Frequently asked questions