By Catherine Powell
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| Image courtesy pxhere |
Into every life a little rain must
fall. Or, so the story goes. When the rain falls in Florida, which is a
frequent enough occurrence, the number of auto accidents dramatically increase. With auto accidents come auto insurance claims. The question I frequently hear from many of
my customers is, “If I get in an accident, will my auto insurance rates go up?” The answer is, “It depends.” If you aren’t labelled at-fault, then your
rates won’t go up since the claim will be filed through the at-fault driver’s
insurance company, unless they have no insurance. If you are deemed at-fault, the answer is Yes,
your rates will go up. Then next
question is invariably, “Why and by how much?”
What’s
the point of having Auto Insurance?
Any kind of insurance is designed to reduce
the risk of catastrophe. People buy homeowner’s
insurance to protect their property, but it also includes provisions for
liability issues, theft and other unpredictable misfortunes that can befall a
homeowner. Likewise, with an auto
insurance policies, while most people focus on the auto part of the term, your
auto coverage is designed to protect you from much more than having your
vehicle repaired after an accident.
Depending on where the accident occurs, your vehicle could cause damage
to someone’s property, which is covered under your policy. Likewise, you or your passengers, as well as
those of another vehicle could be injured or killed in a wreck. A pedestrian could be struck and inured or
killed. These are also covered by your
policy. An at-fault motorist may or may
not have insurance. That’s why it’s
always a good idea to have uninsured motorist protection on your policy. Were any of these calamities to take place to
you where you were deemed at-fault and you didn’t have auto insurance, it would
be up to you to pay for repairs to any vehicles involved in the accident, plus
property damage and medical expenses for
everyone injured.
Does
filing a claim mean your rates will rise?
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| Image courtesy flickr |
Many people feel
slighted when they file a claim only to have their rates rise. They feel as though they have paid into the
system and deserve to get something back when worse comes to worse. The problem is, when an accident does occur
and they file a claim, their rates rise in short order, sometimes
substantially. Worse still, sometimes
their insurer will drop them after a claim is filed. This makes many motorists see red. They feel as though they are being punished
for using the very thing they may have paid into for years. In short, they feel cheated. The problem is that’s not how insurance
works. All insurance is based on distribution
of risk. Risk is assessed on several
factors, including location, lifestyle, age, occupation, credit worthiness and
past performance. Even if you’ve never
had a speeding ticket or an accident, the minute either of these events occurs,
it alters your risk profile. This means
you instantly become a riskier proposition to insure. The higher the risk, the higher the premium.
Then comes the
other question of, “How high will my rates rise?” This is a complicated question. Depending on the severity and cost of the
accident, your rates could rise slightly or nearly overnight. If you have more than one at-fault accident
in a year, or are convicted of driving under the influence, this could cause
your rates to skyrocket or your insurer to drop you altogether. Once your rates increase, it could take three
to five years for them to subside if the damages to your vehicle exceeds
$2,000.
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| Image courtesy pixabay |
Another thing
that affects how high your rates increase is location. In a study conducted by Quadrant InformationServices, drivers in 2017 who made a single auto insurance claim of more than
$2,000 saw their rates increase by an average of 44%. However, the same drivers in California saw
their rates increase by 63%, while drivers in Maryland only saw their rates
increase by 21.5%. The study also
pointed out that various insurers increased their customer’s rates in the first
year after an accident anywhere from $1,876-$2,198 for a first accident. That’s why it’s always a good idea to work
with an agency that has access to numerous insurance companies so you can
compare rates.
Bear in mind
that depending on the severity of damages and injuries sustained in an at-fault
accident, your rates could rise much higher.
Auto repair claims caused the rates to rise the least while bodily
injury claims caused them to rise the most.
That’s because while the cost to repair or even replace a car is fairly insignificant,
medical expenses almost always prove to be much higher. The report cited that while the average rate
increase after filing a comprehensive claim was as low as 2%, a bodily injury
claim in Texas typically resulted in a rate jump of 64.8%.
Should you file a claim?
If you lose sleep at night worrying about
your auto insurance rates, there is one other way to stop that from happening. If the damage to your and another motorist’s
vehicle is relatively minor, you can always opt to pay for the repairs out of
pocket. That’s guaranteed not to cause
your rates to rise one red cent.
Catherine Powell is the owner of A Plus
All Florida, Insurance in Orange Park, Florida.
To find out more ways to save on flood insurance, check out her website
at http://aplusallfloridainsuranceinc.com/
Even if you don't file a claim your rates can rise. that's why you need to have your policy assessed every year.
ReplyDeleteI feel it is important to shop all of your insurance policies every year. The insurance companies are necessary but you need to lookout for your own interest.
ReplyDelete