You really didn’t see that sign, big truck or rock that you backed into, because in all honesty it backed into you! Whether you sideswiped another vehicle or hit the brakes to avoid another car, the damage is done and there’s a claim to be filed.
What happens when you file a claim? Once you’ve given your side of the story, your insurance company will conduct its own investigation. Depending on the claim, your insurance provider will pay for your vehicle’s repairs and for damage done to other vehicles involved. Your provider may also offer medical payment for injuries any parties suffered in the accident.
Rates Rise: Insurance Points vs. License Points
These actions deal with the ramifications of the accident, but there are also negative impacts to your car insurance rate. Your rate may go up because you were found at fault in the accident. Keep in mind that there’s a difference between insurance points and license points on your DMV record, as insurance points are used to determine your rates and eligibility for car insurance coverage. They define your risk level.
The Insurance Services Office (ISO) has a system of guidelines for insurance companies to utilize, but each company can make up its own points system. As soon as a DUI or accident from the DMV report hits their system, insurance points are assigned. That four, for example, due to an accident will boost your rates until it expires from your DMV report.
Auto Insurance Providers Look at Several Risk Factors
Several risk factors of your claim go into determining a rate increase, and witnessing rising rates isn’t always immediate. While each company looks at similar factors, how they judge them may be different.
Geico states it won’t automatically raise your rate, because it’s taking your driving record, prior number of claims and payout of total claims into account. Geico also offers a forgiveness on the first at-fault accident, with no surcharge, because accidents happen.
Esurance is on the same page and won’t jack your rates up immediately, particularly for minor bumps and scrapes, such as a fender bender. If you’re a safe driver in their eyes, your rate may not increase by much, if at all.
Your driving record, length of policy retention with the company, fault determination on the claim and severity of claims are some of the factors used to assess a rate increase on your policy. Even if you were found not at fault in the claim, you’re not on trial. Many drivers who have gotten into accidents, regardless of fault, are statistically shown to get into another accident. Since the risk assessment is higher for the company to insure you, your rate increases accordingly.
No-Fault States Exist
In no-fault insurance states, no matter where blame lies, each insurance company pays a part of the claim. Initially, the term no-fault makes you think that rates are less likely to rise, but the opposite is true in reality.
Nearly a dozen no-fault insurance states exist, and it’s not all bad. Every law is different, but no-fault also means your insurance policy will pay out for your accident and potentially all or some of your wage loss and medical bills due to the accident. Your wage loss or medical bills cannot exceed the limit set by your policy, or you’re responsible for paying these charges.
When Will Rates Decrease? Can I Lower My Rate?
Rate increases aren’t like credit, where it affects you for seven years. Typically, your rates will fall within three to five years. Every state has different policies for how long incidents can apply to a premium and how far back auto insurance companies may look on your DMV report.
If you shop around for a new policy, be honest about your driving history. A recent accident may not have hit the DMV report yet. The accident will come back to haunt you after the first bill, when the insurance company pulls your DMV report and your rate increases. Insurance companies pull DMV reports every new term, which also releases expired incidents.
Call your insurance provider and go over accident, speeding and other dates on your DMV record. Find out when certain incidents will fall off, potentially lowering your score.
Do you qualify for any discounts? If you’ve recently purchased AAA, this may present an opportunity for a discount on your policy. Do you get a discount for having your mortgage and auto insurance under the same company? If more than one person and vehicle are on the policy, try rating drivers on different vehicles to see if the premium lowers.
Car insurance claims don’t always raise rates. That’s a myth. When your rate rises, it’s not forever, and there are ways to mitigate the effects, by looking for discounts and working with your insurance provider. It’s better to be honest and work together, than be surprised by rate increases when your policy renews.