How Previous Claims Affect Your Auto Insurance Premiums

June 6, 2022

You have previous claims on your car insurance, so you assume your car insurance rates are going to increase. Luckily, that’s not always the case. It depends on the situation. Even an accident doesn’t necessarily mean increased rates, it depends on the situation.
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Below we help you understand the most common factors that cause your car insurance rates to increase when you have a claim.

What’s the Damage?

The extent of the damage plays the largest role in how much your rates increase, if at all. If the damage was minor and the insurance company didn’t have to pay a lot out, they may not touch your car insurance rates.

On the other hand, if you totaled the car and the insurance company had to pay out several thousand dollars, your car insurance rates could greatly increase. But even a totaled car doesn’t necessarily mean increased rates. It depends on a few other factors that we discuss below.

Who Caused the Accident?

This is a true determinant in what happens to your car insurance rates. If you caused the accident and your car was totaled, you can count on increasing rates. On the other hand, if the other driver was at fault, your rates might just remain the same, even if you had the totaled car. It will depend on how many accidents you’ve had (no matter whose fault). If you are an accident-prone driver, you may end up with higher rates just because of the risk you pose to the insurance company.
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What Type of Driver are You?

Again, insurance companies want to know what type of risk you pose to them. If you don’t have a lot of claims, one accident, or claim may not increase your rates at all. If you can prove that you have a safe driving record, the insurance company may not feel threatened by one claim.

On the other hand, if you are the type of driver that has a multitude of driving tickets and a few accidents, one more claim could be what puts the nail in the coffin. The insurance company may just decide that enough is enough and they will increase your rates, no matter the severity of the accident or most recent claim.

What are the Claims About?

Generally, insurance companies give different weights to different types of claims. For example, if your car was stolen, you may pose a high risk. If you live in a high risk area or you drive a car that is often stolen, your rates may increase upon the first incident.

If you got in an accident, though, and it was just a fender bender, your rates may not increase much, if at all. It will depend on the circumstances. Do you have many previous claims with similar types of damage? If so, then you may see an increase in your rates because you are just a high risk for the insurance company.

Remember, you can shop around for car insurance as often as you want. The previous claims you made, though, will not go away. Any new insurance company will know about them and use them when they determine the appropriate premium for your insurance coverage. Make sure you take the policy that provides the greatest level of coverage at prices that you can afford.
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