Many believe that any claim, no matter its size, will lead to an increased car insurance rate. But this belief is all fable and no substance.
Whether you were involved in a nightly-news-televised pileup or a rock chipped your windshield, you're probably dreading an increase in your rate. Some drivers are so worried that they don't file a claim or even notify their car insurance company of the incident.
filing a car insurance claim doesn’t always translate to paying more for car insurance
Your insurer considers many factors before deciding to adjust your rate, and thus, there are plenty of good reasons your premium may stay the same after you make a claim.
With that in mind, here's our rundown of the 5 factors that help determine whether a claim increases your car insurance rate.
1. the severity of the incident
To a car insurance company, no 2 claims look alike. Having a shattered windshield replaced after a gravity-enamored branch takes a plunge is different from a major at-fault collision.
The severity of the incident, and thus the cost of the claim, proves to be the foremost factor in determining whether a claim will increase your rate.
2. your driving history
If you're a veritable patron saint of safety on the highway — that is, you haven't had a ticket or incident in 20 years on the road — a minor fender bender may not impact your rate at all.
Car insurance companies love safe drivers. They save insurers tons of money every year, after all. Rates usually jump when a company considers a driver to be higher risk, and a driver with decades of safe driving experience doesn't necessarily become high risk after a little fender bender.
Similarly, your customer loyalty counts. Car insurance companies appreciate consumers who've stayed with them. If you've been with your insurer for some time with a fairly clean record, you may not see any increase after a minor incident.
3. who’s to blame
Believe it or not, car insurance companies don't feel like you should pay just for being unlucky. If a reckless driver plows into you, it's probably not your fault, and your insurer may not raise your rate. If, on the other hand, you were to blame for the accident, you may see an increase in your premium. (See below to learn how this doesn't apply in no-fault states.)
Note that certain behaviors are particularly egregious when it comes to determining fault. If you were driving recklessly or while impaired, you'll probably see either a towering jump in your rate or, even worse, the cancellation of your policy.
4. no-fault or not
As mentioned above, car insurance companies pay out on claims when their policyholder is determined to be at fault in the collision. But that all changes in no-fault insurance states.
In no-fault states, your insurance company is almost guaranteed to have to pay some portion of a claim, no matter who's to blame. That means it's more likely that your insurance rate will go up after a claim, though the above factors will still apply to a certain degree.
5. your policy’s details
In today's competitive car insurance world, many companies offer "accident forgiveness" for small claims. Accident forgiveness often allows you to file one or more small claims without affecting your rates.
However, what accident forgiveness means for your policy depends on your provider and their standards, so carefully review your policy to learn exactly how your insurer will handle a small claim.
myth busted: claims don’t always bump up your rate
As you can see, car insurance companies consider many factors before deciding to increase your rates, and your driving history ranks among the most important. So keep driving safely — it may save you even if you do have to file a claim.
Remember too that it's always better to notify your insurer of an incident, even if it was a minor one. There are 2 reasons to do so. First, if the incident is reported to the police, it becomes a matter of public record that your insurance company will discover — leading them to increase your rates anyway. Second, if another driver involved in an incident decides to file a claim on the event, your insurer will be better armed to research the matter.
Finally, remember that you always have the right to switch insurers. If you find that your current company raised your rate after a minor claim, get a few quotes to see if you can find a better policy.
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