Will My Insurance Rates Rise After A Claim?

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Many people are afraid to tell their car insurance companies about minor damage because they fear that their rates will increase. Insurance Information Institute says that if you are not connected to another person, it is possible to be tempted to keep quiet about minor accidents. The question is, why would you buy insurance if it doesn’t make sense? There are reasons for this.

This is because petrified people assume there will be an increase in premiums. There is a common misconception that filing an insurance claim is dangerous. People don’t want insurance to be a burden. It is important to remember that insurance is there for their protection and that they have the right to make use of it when necessary. The outcome of your claim will depend on who was at fault. You could lose your entire coverage if rates go up if you are at fault.

These are the essential things that you need to know before and after you file a claim.

1. Before you buy insurance, get clarifications on penalties

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Before you buy car insurance, it is a good idea to check your company’s renewal guidelines. These are the most important questions to ask when you shop for car insurance.

You can also read reviews from ‘Consumer Reports to find out how different insurers rate in terms of customer satisfaction. This allows you to find out which insurance companies offer renewals before purchasing auto insurance.

2. An accidental minor injury may not result in the cancellation of a policy

The vast majority of people can renew their policies without any problems. However, it is unlikely that your coverage will be terminated at the first at-fault incident. Insurance companies will close coverage if a driver causes two at-fault incidents in the space of three years. Companies may give you more lenience if you’re in a higher rate tier.

Insurance companies use the tier system to assess whether a driver will be involved in an accident. It is based on large statistical data for each tier. Based on factors like their driving record, past three-years’ accident history, and the type of car they drive, drivers are placed in tiers.

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The tier system does not limit car insurance companies’ ability to wait three years or to have multiple accidents before they can cancel coverages. Even a single claim can lead to the cancellation of coverage. You won’t have a chance if alcohol is involved. Multiple tickets are another reason for non-renewal. This applies even after an accident.

3. Rates may rise if you are at fault

Although insurance companies won’t immediately cancel your policy if you are at fault, they will increase your premium at your next renewal.

What if you need to file a claim despite having an accumulated no claims bonus? You can still enjoy the no-claims bonus that you earned for each claim free year, which can accumulate for up to five years. This could be seen as a form of “give and take” strategy. If you wait for years to file a claim, you will get a discount. However, if you do claim, we will reduce your discount. It is simple: the more claims, the higher the rates.

4. There are other things to consider.

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Insurance companies reward loyalty by offering different policies to customers. The number of years you have been with the same company will not be wasted. You may be offered ‘freebies’ such as no premium increases, loss of coverage or no increase in your premium. All these factors are considered in relation to the number of years without a claim.