How Do Claims Affect My Car Insurance Rate?

When you're involved in a car accident and file a claim with your insurance company, you might notice that your premium goes up significantly within a few months after the claim is processed. In many cases, you just can't get around filing a claim -- few people are willing or able to pay for the repairs or replacement of their vehicle out of pocket when they have some insurance coverage. However, filing any type of claim will go on your record and could have an impact on car insurance rates. Here's a close look at how claims affect your car insurance rates:

Claims that Increase Your Car Insurance Rates

Any time you file a claim, you are telling the insurance company that you were involved in an accident and are seeking reimbursement. Whether you were involved in a head-on collision that requires the complete replacement of your vehicle, or a serious fender bender that requires extensive repairs of damage to your and the other driver's car, your insurance company will go ahead and issue a check but will also add this event to your account history.

Types of claims that typically increase car insurance rates include:

• Car is totaled in an accident
• Vehicle is damaged by a falling tree or other natural disaster
• Car is vandalized or stolen
• Car is inoperable after a serious collision
• Windows and windshield are shattered from an accident or act of vandalism

Avoiding an Insurance Rate Hike after an Accident

If you can realistically afford to pay for the cost of repairs or even the replacement of your vehicle without filing an insurance claim, you can ward off any increase in premiums in the near future. Review your policy to see if the deductible on your policy would even allow for complete coverage of services you need to restore your vehicle.

If the deductible is very low and the insurance provider would cover the cost of repair or replacement of your vehicle, you still need to consider whether you want this event on your record and are prepared to deal with an increase in your premium. If you are able to pay for the costs on your own, you can prevent an insurance rate hike altogether.

If you were involved in a fender bender that only left some small scratches on your car or a dent in the bumper, it may not even be necessary to file a claim. Consider having the repair work done independently so that you don't end up getting an increase in your insurance.

Sources:

Bankrate.com -- Claims that boost your insurance rates

CarInsuranceRates.com -- How Do Collision Claims Affect Your Car Insurance?

Investopedia -- Will Filing an Insurance Claim Raise Your Rates?