You have had bad luck and had to put through several claims with your auto insurer. You are now worried that your insurance provider may raise your rates or worse cancel you instead of renewing you at your next renewal period. So what does happen when you file too many claims with an insurance company?
Part of the answer to this auto insurance claims question is; it depends on your insurance company and the state you live in. Each company is required, for each respective state in which they operate, to file their rate structure and have that state's approval before they are allowed to operate in the state.
The rates filed by an insurance company and approved by the state determine how they are allowed to operate in any given state. With that basis, here are some different scenarios by which an insurance claim (or multiple claims) could affect your future insurance premiums.
Scenario 1 - If the accident is your fault, this information will be entered into your state Motor Vehicle Record, MVR for short. Each insurance company looks at your MVR as part of the basis for determining the premium you will be required to pay for insurance in a future premium period.
Scenario 2 - Many insurance companies have developed a scoring system. One of the factors affecting your score will be the number of accidents you have had, if any, and the size of the claim, even if it was not your fault and no entry was made into your state's MVR. Part of the scoring system also involves your credit score. Statistical information indicates that the higher the credit score the more unlikely the individual would be involved in auto accidents.
It will definitely hurt your insurance premiums if you have the unfortunate experience of having to file too many claims. Sometimes it is unavoidable, because all claims over $500 must be reported and have a police report filled out and filed. With today's prices most accidents, unless they are small parking lot bumps, easily go over the $500 limitation.
One way to save is to carry a higher collision deductible such as $1,000 instead of $500. Most of us do not just have $1,000 sitting around to pay for our part of a potential insurance accident, but you should consider whether to create a savings fund just in case such an event should occur.
An obvious way to save on the cost of car insurance is to do everything you can to keep from being involved in auto accidents by driving defensively, being alert, avoid speeding and careless driving habits. Taking a defensive driving course through your state law enforcement is another good way to keep you up to date on your road skills and in some states you will obtain an auto insurance discount.
Another way to save in the long run is to carry adequate amounts of insurance coverage. Even though the premiums are more expensive, normally you can obtain a lot more liability coverage for very little extra premium cost on a comparative basis. This coverage protects you in case you are at fault or are partially liable in an accident.
When a driver is involved in accidents and makes "too many" claims, an insurance company can cancel a policy, or non-renew the policy at the end of its term. If your insurance provider does not continue your coverages due to the amount of claims you have placed then you will insure with a different insurance company. Or your insurance carrier may continue to keep you as a policyholder however they can increase your rates based on their rating system. A rating system usually takes into account the number of claims and the amount of the claims so your premiums will normally be higher if you have had a lot of claims against your policy's coverages.
In today's technologically advanced world insurance companies are able to more closely match the cost of providing insurance to an individual's driving habits, or whether they appear to be accident prone, or are accident free. This allows them to charge the cost of the additional claims to those who actually incur the expense, rather than a blanket charge, even to those who have no claims.
If your insurance company raises your rates or does not continue to keep you as a policyholder because of the amount of claims you have had then you can shop around the insurance coverages you need.
Remember, CarInsurance.com is the easiest way to buy car insurance on-line or over the phone. We have solutions for your particular situation or any situation.