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How Claims Affect Car Insurance Rates

Car insurance rates are a constant area of concern for most consumers. As each of us have had to tighten our belts in recent years to keep our households afloat, car insurance is one expense many among us have taken a closer look at in an effort to save some money. But a hidden expense factor often goes unnoticed in these examinations. Car insurance claims can drive premium costs as much as any other factor. In some cases, they are more significant to rate calculation than any other single variable. Claims are on the minds of many drivers, and insurers recognize that. A concept called accident forgiveness is making its way into more auto policies as a method to entice drivers to sign on or stick with companies. Accidents and other insurance claims can cost you on your premium, so knowing all you can about this area of car insurance can only help you going forward as a consumer and a policy holder.

Claims Can Cost You Money

It is no surprise on a logical level that car accidents and other claims can end up costing drivers money on their premiums. After all, every claim you file costs the provider money, so it follows that this cost will find its way back way to you. It is still frustrating for all of us as policy holders to think in these terms, though. We pay for a policy that tends to punish us for using it. This seeming paradox has to inform your thinking when it comes to car insurance. It is a form of protection that you really shouldn't lean on for small or frivolous claims, because this sort of tendency can end up costing you on your rates for years to come. Better to look at it as protection that's there when you really need it.

Car insurance rates can be tremendously affected by claims. For example, if you are in an accident and are held liable, your insurance provider will likely pay out for the liability claim, but may very well raise your rates or even cancel you as a result. Auto insurance rates are based on the provider's assessment of risk, and this risk perception obviously changes in the face of a large claim.

Repeated claims do even more damage. Even minor claims filed repetitively demonstrate to an insurer that you are a high risk to insure, and are more likely than the average driver to file a claim for any particular event. If you get involved in multiple non faulted accidents, or crashes in which the other drivers were liable, you can still see an increase in your car insurance rates or risk getting canceled or non renewed.

Accident Forgiveness a Growing Trend

This is where accident forgiveness comes into play. Although it is not exactly a new concept, there are a few important reasons why accident forgiveness has become more significant in auto insurance discussions. First of all, auto insurance providers who have been providing accident forgiveness as a standard or optional part of their policies are starting to advertise this feature more than they used to in their marketing campaigns. As the market has tightened and online quote sites like this one have made it easier for consumers to seek out multiple competing bids for policies, providers have had to pull out all the stops to try to differentiate themselves from their competitors.

Some companies were once reluctant to advertise accident forgiveness because of the expense they incurred in extending this olive branch to drivers. But nowadays they are typically more concerned with retaining clients and attracting new ones than they are about limiting their own costs in offering these features. As marketing for accident forgiveness has gone on the uptick and more drivers have inquired about it with their own providers, a growing list of companies have begun adding accident forgiveness as at least an optional feature on their policies. Basically, accident forgiveness as a concept means that when you get into an accident, your rates will not be raised as a result. There are usually stipulations involved to qualify. Normally they have to do with length of time as a customer and as an accident free driver with a company.

Learn More about Insurance Claims

Regardless of specific provisions designed to minimize their impact, car insurance claims will always be closely correlated with increases in premium rates. To keep your rates low, do everything you can to avoid a claim. Drive safely and within the law, and keep your car in proper working condition. Pay attention not only to your own driving but to the driving behaviors of others with whom you share the road. Learn how claims affect car insurance rates and save big money.

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