When Should I File an Auto Insurance Claim?
You have an auto insurance policy just in case the unexpected happens and you find yourself responsible for a collision. But what happens when you need to file a claim? Is it worth it? Knowing when to file a claim and understanding how it could affect your monthly premium is essential in making the best decision in the event of an accident.
If you are in a car accident that isn’t your fault and the other driver’s auto insurance covers the claim, then your auto insurance premium won’t be affected at all. However, if you are the at-fault party in a collision and you file a claim under your collision coverage, then you may see your premium take a leap when you renew your policy. To avoid this increase, many drivers consider paying for minor damages out of their own pocket.
Why Your Auto Insurance Premium Rises
Believe it or not, you aren’t personally being punished for being involved in a collision. The increase in your premium isn’t a punishment directed at you, like getting a slap on the wrist from your insurance company. When your insurer is coming up with your insurance premium, it’s all about the numbers.
Insurance providers use complex algorithms that consider factors like age, gender, driving record, how many claims you’ve filed, where you park at night, marital status, and more. Your premium is based on these factors, which is why you and your neighbor could have the exact same coverage limits but pay vastly different premiums.
Filing a claim affects your premium because it changes the calculations your premium is based on. Statistically speaking, after you’ve filed a claim, you’re more likely, statistically, to file additional claims in the future. As far as your insurer is concerned, there’s a greater risk associated with insuring you; therefore, your premium increases to offset the risk.
Which Type of Claims are the Most Expensive?
Unsurprisingly, insurance claims in which your insurance company must pay out for medical care result in the highest bumps in premiums. Comprehensive auto claims, on the other hand, generally cause the most modest premium increases. If you are in an accident but are not the at-fault driver, then you shouldn’t have to worry about your monthly premium being affected. In most cases, and with most insurance companies, if you are not at fault but still have to file a claim with your own insurance company, your rates may not go up.
Think Before You File an Auto Insurance Claim
Your insurance is there to help you take care of the unexpected and filing a claim to cut down on your out-of-pocket expenses after an accident can help to ease the financial burden. However, before you file a claim, especially for minor damages, call your agent directly and get his/her advice. Don’t call in a claim directly to the claims department if it’s not an emergency. Call your agent first, that’s what they are there for, to advocate for you and give you their advice. You can take the advice, or still file the claim, it’s totally your choice.
Say, for example, that you are responsible for a minor fender bender that left you needing a $550 repair. If you have a modest $250 deductible, it may be tempting to file with your insurance company to have them cover $300 of the repair. However, while filing may save you money upfront, doing so will likely result in an increase in your monthly premium. Before you know it, the increase in your premium will exceed the $300 that you saved by filing.
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Filing an Auto Insurance Claim: The Pros and Cons
The Pros of Filing an Auto Insurance Claim
Your auto insurance company will cover the accident up to your policy limit, potentially saving you thousands of dollars.
You don’t have to worry about negotiating with a repair shop regarding the cost of repairs; your auto insurance company does that on your behalf.
If your policy includes rental coverage, then you won’t have the added expense of renting a vehicle while yours is in the repair shop.
The Cons of Filing an Auto Insurance Claim
If you currently have an accident-free discount, then you may lose your eligibility for the discount.
Your auto insurance company may raise your premium when your policy term renews.
The accident will be on your record for 3 or more years, which may affect your rate or ability to get affordable auto insurance coverage from another provider​.
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How Many Claims Before They Cancel Your Policy?
Nevada state laws dictate when insurers can cancel auto coverage. If you violate the terms and conditions as stated in the original contract, the insurance company can act within its legal rights to deny coverage at the time of policy renewal or cancel your policy with immediate effect. The reasons for cancellation or non-renewal typically revolve around customers making too many claims, having too many at-fault accidents, bad driving record, delinquent premium payments as well as fraudulent claims.
With all said and done, auto insurance companies are in the business of making money, and if they have to pay out more often than they are bringing in from your premiums, they will have no option but to cancel your contract.
Making Multiple Auto Insurance Claims in a Short Period
Getting into a car accident can be nerve-wracking. Getting into more accidents shortly after can be extremely frightening and could make you worry over several things. One good reason to worry is the effect multiple claims will have on your auto insurance.
Generally, car insurance companies opt to cancel an auto insurance policy if you’ve filed too many claims over a certain period of time. The number of claims needed to cancel a policy will vary from each insurance company. Some auto insurance companies will drop you if you file more than three claims within a three-year period for accidents that you were liable. Most insurers, however, will opt for non-renewal of your policy or charge a higher premium, rather than suddenly cancel it.
Non-Renewal vs. Cancellation of Auto Insurance
It’s important to note that there is a clear distinction between a canceled insurance policy and a policy non-renewal. A canceled policy leads to termination of your auto insurance coverage even if your policy term isn’t up while a non-renewal means you’ll be dropped by an insurer at the end of your current policy term.
Having your auto insurance policy canceled is not only frustrating, but it can be embarrassing as well. When your insurer cancels your policy, you should receive a notice of the termination. If you have appealed to your auto insurance company and cannot have the policy reinstated, then you should start looking for a new provider before your policy ends. Losing your auto insurance in this manner can make it challenging to find insurance later and may force you to pay more in the long run because it will impact your insurance credit score.
Let Nevada Insurance Enrollment Advise You
If you are in a collision and must file with your auto insurance company, chances are that you can expect to see a hike in your insurance premiums. Talk to your auto insurance agent to get some tips on what changes to your policy you may be able to make to bring your premium back down to a comfortable number.
If you’ve been dropped from your current auto insurance or know your policy won’t be renewed, it’s crucial to start making arrangements for a new policy as soon as you can. Just because you’ve been rejected by one insurance company doesn’t mean that they all will follow the same cue. We can help you compare auto insurance quotes to help you find the best insurance rate after your cancellation/non-renewal.
Talk to one of our knowledgeable auto insurance agents today, and let’s get you started on the search for a great new policy.​
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