The most dreaded fear about an insurance claim that I hear from clients…
“If I make a personal injury claim on my car insurance, won’t my rate go up?”
There is a common misunderstanding among the public at large. Many smart people believe that the act of filing a claim against an insurance policy (be it your own policy or someone else’s policy) automatically makes your own insurance premiums skyrocket. This is simply not true.
Insurance rates are set based upon a myriad of factors. Companies use complex algorithms in order to project risk and determine rates. Just a few of these factors include: who was at fault for the loss; your driving record; how many average miles you drive; the severity of the accidents you’ve been in; and the geographic location where you do most of your driving.
All companies weigh risk factors differently. Each insurance underwriting program is unique. While your rate may go up under one company’s system due to the filing of a claim, another company’s premium may not increase at all under the same or similar circumstances when a claim is filed.
Many times a claim is based upon damages caused solely by the fault of another party. Every insurance company views claims differently and takes different factors into account when determining your insurance rates; however, most insurers do not raise your premium simply because you were the unlucky victim of someone else’s negligence.
If you find this hard to believe, check out a direct quote from a major auto insurer:
“Believe it or not, car insurance companies don’t feel like you should pay just for being unlucky. If a reckless driver plows into you, it’s probably not your fault, and your insurer may not raise your rate.”*
*See Esurance 2013 website https://www.esurance.com/insurance-resources/car-insurance-rates-claims-myth.
Unfortunately, there are some instances in which you are forced to make a claim on your own policy despite the fact that the accident occurred through no fault of your own. Again, just because a claim has been made on your policy does not make your rate automatically go up. Many factors come into play, and there generally is some common sense attached to the insurance rate adjusting algorithms.
First and foremost, if the claim is against your policy due to the fault of another party who failed to have adequate insurance, the insurance company takes note of this and is less likely to raise your rate than if you were the at-fault party.
Take note that some companies also sell auto policies that include limitations on when your insurance rate can be increased despite accident history (free accident, accident forgiveness, etc.). You should read your policy to see if this applies to you.
Finally, don’t forget to put things in perspective. If you have a claim worth $100,000.00, it may make sense to risk a premium increase in exchange for full payment on a valid claim. If your auto insurance rate increased $200.00 per year due to your claim, but you were paid $100,000.00 on that claim by your insurer, it would take 500 years of increased payments to equal the $100,000.00! Obviously, in this scenario, it would never make sense to forgo making a claim.
Don’t buy the lie that your insurance rates will immediately or automatically increase if you file a claim. If you get good advice from an experienced injury lawyer, he or she can help you to weigh the factors involved and make an informed decision.
Attorney Matthew Price of Price & Randle, LLC recently wrote a book entitled, “The Lies Smart People Believe about Missouri Auto Insurance Claims.” The above article is an excerpt from his book. In the book, Attorney Price addresses common questions posed by accident victims. A full hardback ($29.99) or paperback version ($16.99) can be purchased at http://www.blurb.com/b/4272164-the-lies-smart-people-believe-about-missouri-auto, or you can follow this link for a FREE pdf copy of Attorney Price’s book.