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Claims that Increase Premiums

cc-4Claims that increase premiums are determined by the amount of an insurance claim, who’s at fault, and your driving record. If you have a minor accident or collision and the cost of repairs is only slightly more than your deductible, you should seriously consider paying for the repairs out of pocket instead of paying for claims that increase premiums.

In making the decision, here are some things to consider about your auto premiums and how they will be affected.

Some insurance companies have an “accident forgiveness” clause when you meet their criteria.  Typically, when you have been insured with the company for a specific length of time, they will allow you to report a claim without an increase in premium.

Even if you don’t qualify for accident forgiveness due to your time as a loyal customer, some companies allow you to buy accident forgiveness.  Before you add this coverage, carefully investigate if it’s worth the additional premium.  It may be wiser to save the premium to cover the cost of a minor accident yourself.

80% of All Drivers Overpay for Insurance. Do You? Start Saving Now. When you have a claim related to an at-fault accident, your insurance company will decide whether, or how much, to increase your rate based on several factors.

Every insurer has a predetermined accident surcharge.  Before you make a decision about who to buy your car insurance from, you can ask to see it.  Spending a little time doing the research can net big savings, since the surcharge ranges from 10% to 40% depending on the company.

The predetermined surcharge applied to your particular situation will affect how much your rate jumps after a claim.  If you’ve had more than one claim, expect a sizeable increase.  If the claim coincides with some other change, such as replacing your car with one that’s more expensive, then that will magnify the impact of your budget.

In addition to the accident surcharge, you stand to lose any “safe driver” discounts that you may have had prior to your accident. Fortunately, if you only have one accident and maintain a clean driving record going forward, your premium will return to its original rate.  If you also pass a milestone birthday or make some other lifestyle change that moves you into a lower risk category, your rate will reflect that, too.

If you are ever involved in an accident with an uninsured motorist and use your own uninsured motorist coverage to repair the damage, your premium won’t increase.

After you consider all of this, remember that if there is a bodily injury, no matter how minor, you should always file a claim.  It’s better to suffer from a rate increase, no matter how painful, than to end up paying a personal injury claim out of pocket.