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How Auto Claims Affect Auto Insurance Rates

Amanda Lautieri Portrait

Some drivers hesitate to file a claim with their car insurance company unless absolutely necessary because they fear that their rates will automatically increase.

This is not always the case. Whether your car insurance rates go up and by how much depends on your car insurance company, the circumstances of the incident, and whether you have accident forgiveness on your policy. Although you cannot know for sure how filing a claim will affect your auto insurance rates, the following information may help you predict the effects somewhat.

Accident Specifics and Your Rates

These are some of the factors that your insurance company will likely consider when determining how an accident will affect your car insurance rates, if at all.

  • The severity of the accident. Damage from an accident can range from a scratch in the paint to a totaled car.
    • Greater amounts of damage are likely to lead to a greater rate hike, or surcharge, because the insurance company has to make a larger payout.
  • The at-fault driver. In many cases, your car insurance rates will increase if the accident is your fault, but stay the same if the other driver is at fault. However, certain exceptions apply, including the following:
    • Some companies will still increase your premium because you're statistically

      more likely to get into another accident. posing more risk to your company.

    • If you live in a no-fault state. both insurance companies pay for some of the costs, and your rates will likely rise no matter who caused the collision.
  • Your value to the company. Safe drivers are cheaper for car insurance companies to cover.
    • If you have a long history of safe driving and you have been with the company for a long time, you are may see less dramatic hikes in your premium than someone with a poor driving record .
    • Some companies also offer accident forgiveness for good drivers. This means your first accident would not result in rate hikes.

Auto Theft and Your Rates

If your car (or equipment/goods inside your car) is stolen, you'll likely make a claim to recover the costs. Because your car insurance company will have to pay out on this claim,* you'll likely experience a rate increase.

Note that even living in an area with high crime rates can increase your premiums. The more likely you are to become a victim of auto-related crime, the more risk you present to your auto insurance provider. Higher risk means higher rates.

* You'll need comprehensive coverage to file a claim for theft.

Category: Bank

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