When you have an accident, you’re thankful that you have an insurance policy to turn to. After the dust has cleared and your emotions settle, you’re able to call your carrier and file a claim and pass much of the burden on to your insurer. Transferring this burden from your shoulders to your insurer’s, however, can come at a cost. That’s why it’s important to know when you should and shouldn’t file a claim against your policy. Compare car insurance rates now by using our FREE tool above!
It may not be immediate, but in some scenarios, insurers will raise a claimant’s insurance rate for using their coverage. Whether or not a claim is ‘chargeable’ depends on the state’s threshold, the type of damages sustained, the amount of damage, fault allocations, and the insurer’s policies and provisions. Not all claims are chargeable but those that are can affect rates for the same general amount of time.
What types of claims can affect insurance rates?
Not all types of insurance claims have an impact on rates. In fact, many policyholders put off filing ‘non-chargeable’ claims out of fear that their rates will skyrocket. Knowing what is and what isn’t chargeable before you’re ever in a situation where you’ll need to speak with a claims rep is important. Each state has different laws pertaining to ‘charge ability’, but in most cases the following is true:
- Comprehensive Claim: Vehicle owners file a comprehensive claim when their car is damaged or missing after a fire, theft, vandalism or flood. It’s also classified as a comprehensive claim if something falls on the vehicle, it explodes, or you collide with a live animal. All comprehensive claims, regardless of the cause of the damage, are considered no-fault claims and non-chargeable losses. As long as you pay your deductible, you don’t have to worry about comprehensive claims affecting your rates for any period of time.
- Collision Claim: Collision claims aren’t as easy to decipher. There are instances where a collision claim would affect your rates and other instances where it wouldn’t. Whether or not you have to worry about charge ability depends entirely on allocation of fault. When claims agents allocate fault, they look at the details and try to determine who was the primary cause of the loss. They will use pictures, the placement of the damage and reports to come to their conclusion. If you’re 51 percent or more to blame, you’ll be hit with a surcharge. If you’re not, you don’t have to worry about the claim affecting your rates even when it’s hit and run.
- Bodily Injury or Property Damage Claim: Bodily Injury and Property Damage claims are third-party liability claims. When a third-party liability claim is made against your policy, it means you were at-fault for someone else’s injuries or their property damage. Since you must be negligent for your policy to pay, it’s common for a third-party liability claim to end up in a surcharge.
The only time that you’re not charged for a liability claim is when the property damage doesn’t exceed the threshold set by the state. This threshold can vary but it’s typically between $500 and $2000 depending on the state that you live in. When there’s an injury claim, there will almost always be a surcharge. This surcharge is also higher than a surcharge for an accident with only damage.
How much will your rates go up after an accident?
How much your rates will actually be affected depends on the carrier you’re with and restrictions set by state law. If you have several accidents on your record, one accident will have a bigger impact. If you’re a young driver, one loss is enough to triple your rates.
If this is your first loss and you have experience behind the wheel, some companies will take it easy on you.
According to a study conducted by CBS News, rates go up by an average of 41% after a single accident claim is filed. If you pay an average of $815 each year for coverage, this is a hike of $335. The same study shows that rates go up by 93% if two at-fault claims are made in the same year.
How long can the company charge a policyholder for their accident?
If you have an accident and your file a chargeable damage claim, most states allow companies to surcharge rates for 36 months once the claim has been settled. The same is true if you file an at-fault claim for third-party damages or medical bills. You should check with state law to see if the rules are different in your state.
When will rates go up?
Insurance companies can’t legally apply a surcharge for an accident in the middle of your term. Because of this, you won’t be put into a new risk class until the claim is settled and your renewal is run. If a claim is filed close to a renewal, it might not affect rates for more than a year. It will fall off 36 months after it’s deemed chargeable with the carrier.
Can a new insurer charge you for an accident?
You might think that you can outsmart your insurer by switching carriers. While some carriers charge less than others, your new carrier still has the right to charge for a chargeable claim that’s been reported on your record. They can see these claims by running a report through the Claims Loss Underwriting Exchange system. Since the claims information is shared industry-wide, there’s no running from a rate hike.
Losing Your Discounts
If you have an accident forgiveness feature on your policy, you might not see a surcharge for your loss, but you could lose access to this feature in the future. You also need to remember that a combination of accidents and violations can lead to the loss of your Good Driver discount for 3 or more years.
Accidents don’t always affect your rates but when they do they can really hurt your pockets.
If you’re not happy with your renewal premium, you should shop the market and try to save money. Use an online rate comparison tool and be upfront with your record from the start so that you can find competitive auto insurance rates in just minutes. Compare car insurance rates now by entering your zip code in our FREE tool below!