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Effect Of Auto Insurance Claims On Auto Insurance Premiums

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All auto insurance claims do not receive the same treatment. Some can turn auto insurance plans into high-risk auto insurance, others barely impact your premiums. You can check your auto insurance guide for more. Here we take a look at how different types of insurance claims impact your finances.

Collision Related Claims 

Collision insurance is intended to repair or replace your vehicle following a car accident, such as a collision with another car, a collision with an object, and another car crashing into your vehicle. However, dealing with collision insurance claims can be challenging and complicated.   

For one, collision insurance claims can significantly impact your insurance rates and insurance premium especially if you are at fault for the accident. 

The insurance company determines who is at fault, not the police. Your insurance company must follow a set of guidelines imposed by the government to determine whether a driver is fully or partially at fault. Here is the list of the government-prescribed fault determination rules

One driver must be at fault in almost all scenarios. Your insurer has the right to determine who is partially or fully at fault, whether or not the police decide to hold any driver accountable. Based on fault determination rules, insurers can determine whether or not you are partially or fully at fault.  

Not At Fault On Your First Collision 

Your insurance premium rates will not go up if you are involved in a collision where you are not at fault. For example, if someone rear-ends you it is highly unlikely that it is your fault. You will also be eligible for a not at fault car hire to help get you around if your car needs repairs.

A head-on collision, also called a straight-line collision, is a traffic accident in which the front ends of 2 vehicles, including automobiles, motorcycles, trucks meet when traveling in opposite directions. If the vehicles meet head-on, there is usually a high chance that injuries will occur. However, even if the insurance premium will less likely increase in a car accident deemed not your fault, you may still have to file a claim against the other driver’s insurance company to seek compensation.

Unfortunately, dealing with the other party’s insurer can be challenging, especially if they refuse a fair settlement. In that case, hiring a lawyer can be beneficial. For example, if you’re from a city like Queens, a Queens car accident lawyer can help negotiate with them until you receive the compensation you need. Otherwise, they’ll take your case to trial.

Your First Collision 

The collision will be documented on your record and affect how much pay annually. Initially, you might not see your car insurance premium increase the very next month but be careful at the time of renewal. In that case, you should review your insurance policy and determine whether the premium increase suits your budget.

Some ways can help you avoid premium increases associated with your first accident, which is found to be your fault. Many insurance companies offer accident forgiveness insurance to protect you against premium increases. So, check with your insurance company if they provide that additional coverage for your car insurance.

On the other hand, if you’re involved in a second car crash within the next five years and you’re found to be at fault, the insurer will more likely increase your insurance premium since you’re already considered a risk.

Having A Clean Driving Record 

A clean driving record is about six years of driving without a claim or conviction. Insurers might not increase your premium at all if you are at fault in a collision, or slightly increase your premium. Some insurance companies might propose an endorsement (aka insurance policy add-on) as first claim forgiveness. The main goal for insurers is to maintain terms with good clients so the endorsement serves as a slight change in insurance coverage to accommodate their client’s provisions. This achieves the effect of better overall business.  

Lending Someone Your Vehicle 

You will be held responsible if someone else drives your car with your permission. If they have an accident, you will be held responsible and it will go on your insurance record because your insurance is attached to your vehicle. It will be difficult to deal with a situation if the person who uses your vehicle does not have their own insurance and the claim is more than your coverage because you will have to pay out of pocket for that incident. Expect your insurance premiums to go up if anyone else is driving your car and the driver is at fault for a collision. 

Carrying No-Fault Insurance 

The name no-fault insurance is slightly misleading because you can still be at fault with this type of coverage. The term no-fault insurance implies that an insurer will only deal with their own insurance company in all cases for all claims. For clarification purposes, if you are the driver at fault in a collision, your insurer will only pay for repairs for your car and not the other car. You might have to pay out of pocket for the damages to the other vehicle if the other party claims for it.