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Claim Series: Will filing a claim increase my car insurance?

2018 10 04 Blog Man Making Call After Car Accident

By Ryan Dedrick on October 23, 2018 in Claims

So, you backed into another car in a parking lot. The space was tight, and the lot was small. We get it. Life happens, and accidents occur. That’s the whole reason you have car insurance in the first place, right?

And then, that question runs through your head: should I call my insurance company after a minor accident? The other car only has a little scratch, and your car is barely dented at all. You’ll probably be tempted to keep this little accident to yourself. I mean, you’d hate to see a hike in your insurance rate.

However, we suggest you file a claim with your insurance company about any accident. And that’s not just because we’re an insurance company. When you file a claim, you get the chance to have some or all of the damage covered. It will also help protect you from any hidden costs you may not be thinking about, especially when you’ve damaged another car or someone else’s property.

You know that there are a lot of factors that impact your car insurance rate, but you may be wondering: What exactly causes your insurance to go up after you file a claim? And since we’re pulling back the curtain on car insurance, we’ve got your answer right here.

Factors that impact your rate after a claim

Now, whether or not a claim will increase your rate is a tricky question. There are a few major points that insurance providers look at about a claim. Let’s dive into some major ones here:

1. The severity of the accident

A big factor impacting whether or not your rate will increase after a claim is how bad of an accident occurred.

If you’re in a small fender bender with barely any damage, you likely won’t see a hike. Or the hike you do see will be pretty minimal and won’t break the bank for you. However, if the accident is larger with more damage, and say entire bumpers need to be replaced, then you could see a more significant increase in your rate.

2. Who’s to blame

Another big factor that could lead to an increase in your insurance rate is whether or not you’re found to be at-fault for the accident. If it’s determined that you were at-fault, you’ll likely see a rate hike because your insurance provider will see you as more of a risk to insure.

For example, say you were sitting at a stop light, and the person behind you hits you because they waited a bit too long to brake. If the other driver is found to be at-fault for the incident, you probably won’t see an increase in your rate. Sometimes you’re just in the wrong place at the wrong time, and a provider won’t punish you for that.

But, let’s give another hypothetical situation. Let’s say you’re leaving the grocery store and back into a parked car. Luckily no one was inside the car, so no one got hurt, but there was damage to the car. You’d probably be found at-fault for an incident like this, and your insurance rate could increase because of it.

3. Your driving history

Insurance providers really appreciate a long-term safe driver. Maybe you always use these tips to reduce accidents and they’ve kept you safe. If it has been years and you’ve never been in an accident, a lot of times providers won’t increase your rate for a small claim. Many insurers have a threshold. If the damage stays under that dollar amount, your rate typically won’t go up. A common threshold is around $1,000.

However, if this is the fourth time you’ve been in a fender bender in the last year, and you’ve passed that threshold each time, don’t be too surprised if your rate increases.

Keep in mind that the more often you file claims, you could increase the chance of your policy being canceled. The more claims you have, the more of a risk you are to an insurance provider.

Why you should always file a claim

Like we mentioned before, we always suggest filing a claim after an accident, especially if there was property damage. Filing a claim means you get a chance to tell your side of the story, and the accident will be investigated. It also means you can use your insurance to help pay for any damages. If you didn’t file a claim, you couldn’t use that insurance you pay for every month and would have to pay for anything out of pocket. That would be a bummer.

There’s a lot that goes into whether or not your insurance rate will increase after you file a claim, and we never want you to avoid filing a claim just because you’re nervous about a rate hike. Better safe than sorry, right?

Ryan Dedrick is a Manager in Home Office Claims. He is responsible for our PIP and Medical Payments Claims Department and also our Subrogation and Arbitration Department. Ryan has a Bachelor of Science in Business Administration from Columbia College. He has spent the majority of his career working in Claims and enjoys it most because he has the opportunity to help people get back to normal during their time of need.