How Previous Claims Affect Car Insurance Options and Costs

When it comes to car insurance claims, there are different types of claims. Some claims are unavoidable, but others should be evaluated before filing. Below is information on the different types of claims and how previous claims affect car insurance options and costs.

Different Types of Claims

car accidentsMost people are aware that an accident caused by you in which someone was injured or property was damaged will affect insurance premiums. This usually results in significant damage and costs, so naturally, you would want to submit a claim through your insurance. There are other types of claims with much lower costs. Some may be your fault and others may be caused by an unidentified party. It is important to give this second category more thought before submitting a claim.

Avoidable Claims

You should take your deductible and possible increase in insurance premiums into account before submitting a claim for minor accidents. Deductibles are an amount that you must pay out of pocket; your insurance policy normally only covers amounts above the deductible. For accidents caused by an unidentified party, your insurance company may not penalize you (in terms of an increase in premiums for that one incident), but your deductible still applies. If you have a minor accident under or close to the deductible amount, consider not filing a claim.

For example, if you have an accident causing $400 worth of damage and your deductible is $500, it is senseless to file a claim since insurance would not cover anything. If you have an accident causing $600 worth of damage and your deductible is $500, insurance will only cover $100. The increase in your future insurance premiums may end up being more than that $100, so again, it may not make sense to file a claim.

How Previous Claims Affect Car Insurance Options and Costs

When you apply for car insurance, the company reviews your entire loss history. This includes accidents for which you were at fault, those caused by unidentified parties, minor claims, and major claims. How often you file claims and how serious those claims are play a role in determining what your premiums will be.  Claims where you are at fault automatically increase your premiums. Claims for damages by unidentified parties may affect you if you have multiple occurrences. In extreme cases, having too many claims can even affect your insurability.