Will Filing a Claim Affect my Auto Insurance Rates?

iStock_000017849680_SmallAfter faithfully making your auto insurance premium payments for years, you may find yourself hesitating to make a claim after an accident. Why? Many people believe that filing a claim on their auto insurance will result in a rate hike. While that can sometimes be the case, it’s important to understand how your insurance company decides to increase your auto insurance rates.

How severe was the accident? Damage from an accident can range from a small dent or few small chips in the paint, to a complete loss of the vehicle. More severe damage means a bigger payout from the insurance company,which sometimes translates into a rate hike.

Who was at fault? If you’re the driver at fault for the accident, your auto insurance rates will increase in most cases. Meanwhile, auto insurance companies are split on whether a rate increase is appropriate for the driver who was not at fault. Some do not raise rates, while others pay attention to the statistics which point to the likelihood of another accident in the future.

In no-fault states, it doesn’t matter which driver is at fault for the accident. Both insurance companies pay for the cost of the accident, and both drivers can usually count on a rate increase.

How is your driving record? Auto insurance companies see long-stand you have never had an accident before, your first accident may not cause a rate increase. Your company may actually advertise something called “accident forgiveness”, meaning your first accident will not result in a premium hike.

If the estimate to repair damages is less than your deductible, you might be tempted to just pay for it yourself. But if another driver is involved, and you’re at fault for the accident, you really don’t have a choice. The best way to prevent an increase in your auto insurance rates is to practice safe driving habits at all times, including defensive driving techniques.

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