Will My Premiums Increase If I File a Claim?

It sometimes seem like salt poured in a wound. There you are, having experienced a car accident - maybe a horrific one with injuries that put you or someone you know in the hospital. Your car is damaged, you are shaken up, and your life has been changed forever. All you want to do at this point is try to heal both physically and emotionally, get your car repaired or replaced and try to go on with your life and forget that horrible day.

Then you receive notice in the mail that your insurance company is increasing your premiums due to the accident. Talk about nerve! Does it always have to happen this way? Do all insurance companies raise premiums on their members after they've had an accident? Actually, there are two things that can keep your insurance from going up:

Whose Fault Was it?

If you are deemed to be at fault in an auto accident - even partially, your rates are probably going to go up unless you have accident forgiveness on your policy (see below). The logic behind this increase is painful but straightforward: Insurance is a gambling game, you've paid a certain amount in premiums for as long as you've been with this company and the company has been happy to keep all that money and consider it 100% profit - they've been winning, you've been losing. Now with this one accident you've probably turned everything around and cost them more than what you've paid in premiums making you the "winner" and them the loser -- they're going to need to step up the game to try to recover their losses. By being at fault in an accident you have shown yourself to be a riskier investment for the insurance company and that risk will carry with it a penalty that you may never recover from (once your rates go up in this manner, they will probably not go back down with this same insurance company, even if you drive safely with them for years).

Accident Forgiveness

Accident forgiveness is a feature offered by many large insurance carriers, sometimes only to their faithful customers who have been with them for a very long period of time. What it basically does is allows you to have an accident - even if you are at fault - and not see your premiums increase as a result. How can they do this and still make money? Simple, most of the time if you have an accident and get forgiven, if you have another accident later, the jump on your premiums will probably be extreme...almost double what a single accident should cause in increases. This type of jump is only likely if you have two accidents within a few years of each other. If you are forgiven one accident and drive safely for at least...five to ten years or so, you may actually qualify for accident forgiveness again, or if not, your premium increase will not be all that significant.