Does a comprehensive claim affect insurance rates?

Car insurance is calculated based on factors that indicate how likely a driver is to file a claim, including age, driving history, car type and mileage. Insurance companies do not release the specific algorithms they use to calculate prices, meaning that each insurer will offer a slightly different rate to the same driver.… read full answer

Since each company calculates premiums using its own individual system, it’s important to get multiple quotes while shopping for insurance. Checking rates from several insurers is the best way to get the lowest price for whatever coverage you need.

It’s also important to note that car insurance is regulated at the state level, so the factors that usually go into calculating rates might not all be considered in every state.

Factors Affecting How Car Insurance Is Calculated

• Age. Teenagers and seniors are the most high-risk, although insurers also consider years of driving experience.

• Coverage levels and state requirements. Each state has its own minimum requirements for insurance, but customers can also choose full coverage or higher liability limits, along with many other optional add-ons. Consequently, more coverage will mean a more expensive policy.

• Claims history. Besides driving history, your previous claims show an insurer how often you cost insurance companies money in the past, thereby hinting at future behavior.

• Coverage history. Although it can seem unfair to drivers who previously didn’t have a car, insurance companies consider you higher risk if you have a gap in your history of insurance coverage.

• Credit History. Most insurance companies use a credit-based number called an insurance score when calculating rates, since credit is shown to correlate with the likelihood of filing a claim. However, not every state allows the use of insurance scores, and many states have some consumer protections in place to restrict their use.

• Deductible. A higher deductible means a lower premium, since your insurance company will have to pay less if you file a claim.

• Driving record. Speeding tickets, at-fault accidents, and serious violations like DUI or reckless driving indicate to an insurance company that you are particularly likely to cause damage with or to your car.

• Gender. Young male drivers are the most expensive to insure, although the gender-based difference in price gradually evens out. As with insurance scores, some states have banned the use of gender as a rating factor.

• Location. Certain areas are low in crime and less of a risk to insurers, while others have plenty of traffic, high crime rates, and/or destructive weather.

• Marital Status. Premiums are usually cheaper for married people, since they are statistically less likely to cost an insurer money.

• Mileage and car use. The more time you spend in your car, the more likely you are to cause a crash, so insurance is often more expensive for commuters, as well as people who use their cars for business reasons.

• Occupation. Certain jobs, especially those that involve late hours and stressful environments, will make your insurance company think you are extra likely to be in a car crash.

• Storage and Parking. Depending on the insurer, you may be charged less if you park your car in a garage rather than on the street, and long-term storage policies are much less expensive than standard policies.

• Vehicle. Insurance companies judge cars on how expensive they are to repair, how likely they are to be stolen, and how fast and powerful they are.

Some of the factors used to calculate car insurance premiums are beyond your direct control, but there are still steps you can take to save on insurance. You can adjust your deductible and coverage level, for example, although you should never jeopardize your future financial stability to lower costs right now.

In addition, you can focus on improving your driving record and credit score. Looking for car insurance discounts and comparing multiple quotes will also help your wallet.

You should not file an auto insurance claim if only your own vehicle is damaged, there are no injuries, and the property damage is minimal. A claim might make it cheaper to pay for a single incident, but it will likely raise your future premiums, which could end up costing you more money in the long run.… read full answer

When Not to File an Insurance Claim

1. After a minor single-car accident, when there’s little damage.
2. After an accident with another driver resulting in no injuries and minimal property damage.
3. If the cost to repair your car is less than your deductible.
4. If the rise in your premium as a result of filing a claim will be more than your out-of-pocket costs.

A single at-fault claim raises premiums by about 40% on average. That means the average driver’s annual premium of about $1,500 would increase by approximately $600 after an accident, and it wouldn’t go down for three to five years. By comparison, the average collision claim is about $3,600.

Consequences of Not Reporting an Accident or Filing a Claim

Although it’s often the right decision to report accidents and/or file a claim, there’s no law that requires you to tell your insurance company. But insurers do require policyholders to immediately report accidents, and failing to do so can result in denied claims.

As a result, you should notify your insurer any time an accident involves another driver or results in any injuries. You should also contact your insurance company any time fault is unclear or if there is serious damage to a vehicle.

If you don’t plan to file a claim, remember that insurers keep close tabs on their interactions with customers through the CLUE database. Insurance companies often treat specific questions about coverage as claims with $0 payouts. Although it’s unlikely such a claim would affect your premium right away, regular inquiries could flag you as a frequent claimer.

It’s best to use insurance for its intended purpose—to protect against financially crippling situations. If you can pay out of pocket for a single-vehicle accident, it’s usually in your best interest to do so.

If a car accident is not your fault, your insurance rate could still go up, depending on your state and insurance company. On average, a not-at-fault accident makes insurance costs go up by about 12%, compared to 45% for an at-fault accident.

Insurance rates can go up after a not-at-fault accident because statistics show that having any accident on your driving record makes you more likely to file a claim in the future. And in some situations, not-at-fault accidents can still cost insurers money. … read full answer

California and Oklahoma are the only two states that prohibit insurance companies from raising rates after not-at-fault accidents. In states where it is allowed, the exact amount that your premium will go up depends on your insurance company. As of 2017, for example, Progressive increased premiums by an average of 16.6% after a not-at-fault accident. Meanwhile, Allstate only increased rates by 4.8%, and drivers with State Farm didn’t see their rates go up at all.

Situations Where Your Insurance Company Has to Pay

In most cases, your insurance company won’t have to pay for a not-at-fault accident since the other driver’s policy will cover your expenses. But if you’re hit by an uninsured motorist or you’re the victim of a hit-and-run, your policy might cover the damages depending on what types of coverage you have. Liability insurance alone wouldn’t cover your expenses, but other types including collision and uninsured/underinsured motorist would. And if you live in a no-fault state, your insurance company will have to pay for your medical expenses regardless of who caused the accident. As a result, any cost to your insurer will be taken into consideration when your insurer is re-evaluating your premium.

Although it’s frustrating to be charged for an accident that wasn’t your fault, the effects on your premium will only be temporary. Accidents usually only stay on your driving record for three years, so if you continue to practice safe driving habits during that time, your rates will eventually go back down.