Not all auto insurance claims are treated the same. Some will significantly impact your car insurance rates, while others will barely affect your premiums. Let’s take look at what different insurance claims means for your wallet.
General claims (or own damage claim)
With comprehensive insurance coverage, general claims that don’t involve a collision — such as theft, vandalism, fire, or broken windows — will generally not affect your insurance premiums, so long as you’re not at fault.
However, there are exceptions. If you make a lot of these types of claims, your insurer can actually choose to increase your deductible or even terminate this coverage from your policy.
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Claims related to collisions
Claims made following a collision can have a considerable affect on your insurance rates, especially if you’re deemed to be at fault for the crash.
Fault is determined by your insurance company, not the police. You may be found fully or partially at fault, according to a set of government guidelines your insurer must follow. If you’re really wondering, you can view the fault determination rules here. In almost every scenario, at least one driver involved in a crash needs to be determined to be at fault. Even if the police decide not to lay blame on any party, in terms of driving charges, your insurer may still determine that you were partially or fully at fault.
If you’re not at fault
Your rates aren’t likely to increase after you file a related claim. For instance, if you’re on a congested highway and someone rear ends you, there’s little chance you’re at fault. If you want to know more, you can read all about no-fault insurance.
If you’re found to be at fault
The crash will be recorded on your insurance record and can have an impact on how much you pay each year. You may feel safe seeing your car insurance not rise a month after the claim, but pay careful attention at renewal time. If you notice an increase in your premium, look to compare auto insurance quotes from other providers.
If you have a clean driving record
Generally, this means an average of six years’ of claims-free and conviction-free driving. When you’re found to be at fault in a crash, your insurer may not increase your premium, or may increase it by only a small amount. In fact, some insurers offer an endorsement (or insurance policy add-on) for a first claims forgiveness. In other words, they look at your first claim and not let it impact your insurance premium because you’re overall a good driver. They want to keep good drivers as clients, it’s better for business.
If you’re involved in a second collision
If you’re found to be at fault for another collision within the next five years, you can expect your insurer to significantly increase your premium because you’ll be considered a higher insurance risk. After one collision, you may suffer from a little PTSD and be even more careful. Use this as a way to limit the potential for an accident.
If you rack up additional at-fault collisions or driving convictions
You’ll be in worse shape. If that happens, you’ll be considered a high-risk driver and your only option might be coverage from an insurer that specializes in such cases such as Perth Insurance. Unsurprisingly, your insurance will be more expensive. In fact, sometimes it is cost prohibitive. You may need to give you up your car. There are ways to save by bundling with your home insurance, installing safety devices, and simply driving less.
If you lend someone your car
Your insurance is attached to that car. So, if your friend has an at-fault crash in your car, their crash goes on your insurance record and your premium could increase because of that. Be very careful with whom you choose to lend your car. Another significant cost is if they have no insurance of their own, and the cost of the claim against you is more than your own coverage. For that, you’re paying out of pocket.
If you have accident forgiveness insurance
This is one way you can try to offset premium increases for an at-fault crash. This is an additional coverage you can buy to protect yourself against rates increases. Companies like Aviva have this option and for a low monthly fee, it may be worth it if you worry about a claims experience.
If you have no-fault insurance
The name is a little misleading. Even with this type of coverage, you can still be found at fault. The no-fault system simply means you only deal with your own insurance company for all claims. Even if you’re the driver at fault, your insurer only has to pay for the damage to your car, not for damage you caused another other driver.
The Bottom Line
Avoid a collision, right? That’s not entirely in your control. What is in your control is how you choose to define your policy. Also, how often you drive, and how safe a driver you are will affect your pricing. Should you make a claim? Well, the answer isn’t 100% clear, but we can offer some help. Look at your deductible – this is the money you pay before your insurance company will pay out the remainder of the claim. If you’re deductible is $1,000 and you have a smashed window that will cost $250 to repair, obviously don’t make the claim. Try to only make claims that are significantly more than your deductible – let that be the rule of thumb.
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