Even though you're covered for injury and damages on your auto insurance policy, you should always consider the circumstances before filing an accident claim. Sometimes it's financially wiser in the long run to pay out of your own pocket. Depending on your insurance company, any accident claim, regardless of fault, may cause your car insurance rates to jump.
Car Insurance Claims and Auto Insurance Rates
Each car insurance company follows different policies regarding accident claims, but you can expect a spike in your current insurance rates if:
- Your negligence causes a car accident.
- You've filed several claims, regardless of how minor, over a short period of time.
Both scenarios will categorize you in the eyes of car insurance companies as a "high risk driver." This label is the car insurance world's version of the Scarlet Letter. Once it's applied to your name you're almost guaranteed of higher insurance premiums. The reason for this is that high risk drivers cost insurance companies money.
The best way to avoid a spike in your car insurance rate is to maintain a clean driving record. Some auto insurance companies offer a "first time accident pass." This protects anyone with a perfect driving record from having his or her insurance rates jump following their first car accident.
When Not to File a Car Insurance Claim
It's important to understand when to file an insurance claim.
If you're involved in a one car accident (hitting a tree, for example) and you're uninjured and the car damage is minor, you should think twice about filing an accident claim if:
- Your driving record is checkered with moving violations.
- You've had a car accident in the last three years.
- You can afford to pay for car damages out of your own pocket.
- Your insurance deductible is higher than the estimated repair cost.
The repair costs you pay may be worth not having the accident added to your insurance claims history. For, as stated in the section above, the more accident claims you file the greater the chances of having your insurance premiums jump.
Be Aware of Your Car Insurance Company's Surcharge Schedule
A surcharge schedule (sometimes referred to as an insurance point plan) is a predetermined rate increase that's automatically applied if your negligence causes a car accident. There's no immunity from this. Not even a perfect driving record can protect you.
Your only recourse against surcharges is to inquire about them when shopping for an auto insurance company. Most providers do not voluntarily disclose surcharge schedule information. Even when asked, they may resist. Don't relent. Otherwise, what may seem like a low insurance premium, may be compensated by an astronomically high surcharge.
Surcharges vary by car insurance company and by state. But in general surcharges, depending on your age, could cause your insurance premiums to jump 20-40%.