Can I cancel an auto insurance claim?

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Important facts to know...

  • It’s your responsibility to notify your insurance company in a reasonable amount of time when you have a loss
  • If you call to file an insurance claim, the claim will be assigned to an adjuster who will start a claims investigation
  • If you want to cancel a first-party claim, you’re free to request the cancellation as long as nothing has been paid out
  • When you withdraw a claim, the claim will still stay on your record; it will show as a claim with a payout of $0
  • If you’re at-fault for third-party damages or injuries, you can’t cancel the liability portion of the claim

Car insurance companies are in business to make money.

You’re not going to see any non-profit insurers advertising their services because the entire purpose of starting and running an insurance company is to profit off of the premiums that are collected.

Every time that a client files a claim, that claim costs the insurer money. Not only do payouts take away from the carrier’s bottom line, the administrative costs to investigate the claim do too.

Since claims can get very expensive, insurance companies are very willing to let you cancel a claim after it’s already been filed.

If you regret picking up the phone because you don’t want your rates to go up, there’s nothing holding you back from canceling the claim itself as long as it’s a first-party claim.

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Understanding How Claims Are Handled After They Are Filed

Your insuring agreement specifically states that the insurer promises to make payment to you or a claimant when the policy is active and you file a covered claim.

If you have an accident or your car is vandalized, you’re entitled to file a claim against your own coverage and the insurer is obligated to make a payment.

After you discover damage or you leave the scene of an accident, one of the first things that you need to do is notify your agent that you’ve had a loss.

The agent will take down all of the information so the claim can be investigated. Then, the adjuster will order reports and review loss statements to allocate fault to the right driver.

What types of claims can be canceled?

Insurance companies should jump for joy when their client takes action to request that a claim is canceled after it’s been reported. The sooner that you make the request, the better.

The carrier spends money they can’t recoup on salaries in the claims departments, investigations, running reports, court costs, and settlements.

You’re allowed to cancel certain claims but not all of them.

If you file a claim for benefits that will be paid out to you, you’re free to make the request as long as the claim is still be investigated and payout checks haven’t been cashed. These are called first-party claims.

Some of the coverage options that fall under the first-party class include:

  • Medical Payments
  • Personal Injury Protection
  • Comprehensive
  • Collision
  • Rental Reimbursement
  • Uninsured Motorist Protection
  • Uninsured Motorist Physical Damage

Why can’t third-party claims made against your policy be canceled?

You can cancel claims for benefits that would be paid to you but you can’t cancel any claims filed for benefits to be paid out to a third-party.

A third-party claim is made when you or a driver in your home are at-fault for damages to others. To pay for the damages, the insurer will use your Bodily Injury and Property Damage coverage.

Since it’s your responsibility to pay for damages that you’re liable for, it doesn’t make sense that you’d be able to cancel the claim.

If you’re deemed to be at fault for the loss and you’re liable to pay for repairs or medical bills, your insurer is obligated to issue an offer to the other party so that they can be compensated.

Why would anyone want to cancel their insurance claim?

There are a bunch of reasons that people choose to cancel their claims.

It’s nice to have your policy to lean on for major losses, but going through the whole process doesn’t make sense every time your car is damaged.

Here are some valid reasons to cancel your claim:

How do you cancel your existing claim after it’s filed?

If it’s a first-party claim, you can cancel your claim the same way that you filed it.

Simply pick up the phone, dial your claims department, ask for your adjuster, and let them know that you’d like to withdraw the claim instead of collecting.

Most of the time, the insurance company will ask you to sign a form stating you voluntarily withdrew the claim.

Will a canceled claim still show up on your records?

A claim that you’ve withdrawn isn’t going to disappear entirely. Insurance companies keep the records on file and the information is reported to all carriers when you’re shopping around.

Even though a claim that’s been withdrawn does show up in your report, it will show up as a claim that was settled with a $0 payout.

Can a claim that’s already been canceled still affect your auto insurance premiums?

It’s never good to have a claim on your record. Fortunately for you, a claim that has a $0 payout will more than likely have no impact on your rates in the future.

Most states have damage thresholds that have to be exceeded before the insurer can surcharge premiums.

In some states, the thresholds are $750 and others have a higher one at $1000.

Even though there can’t be a surcharge, it’s possible that carriers could use the claim record to take away claims-free discounts because there’s a loss that’s been reported.

You should always think before you file a minor claim. Insurance is there to help you recover after an accident but you don’t always need to use your benefits.

If you’ve decided to deal with the damage on your own, cancel the claim. Then, you can shop around and see if you can save money switching to other carriers by comparing rates online.

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