As a car owner, it’s important for you to know the adverse effects of accident damage repair on the insurance premiums you pay. As a general guideline, an accident damage repair claim can result in an increase in insurance cost.
Filing a Claim
Your car is one of the most valuable assets you own and auto insurance provides you with investment protection in case of damage caused by accident, theft or vandalism. As a driver of your vehicle, you’re responsible for the safety of the passengers in your car, other drivers on the road and pedestrians. You’re also responsible for property damage caused in an accident. Insurance helps cover the cost of injury or damage in the event of an accident. There are 2 types of coverage, namely comprehensive and collision coverage. Comprehensive covers damage to your vehicle caused by vandalism, hit-and-run accidents, collision with animals, or damage caused by acts of nature. Collision coverage protects you from damage caused by a collision with another vehicle on the road. Although collision claims adversely affect your insurance premiums, comprehensive claims cannot. If you’re involved in an accident, you should inform your insurance company and initiate the claim filing process. The claims adjuster will help you determine the extent of damage caused and will also help you determine who was responsible for the accident.
Consequences of Filing Claims
If you’re not responsible for the accident, and if your insurance company can recover its losses from the other driver’s insurance company, you might not have to pay higher premiums on your policy. However if you’re at fault, then your auto insurance cost can rise by as much as 20 to 40 percent every six months. This increase would depend on the extent of damage involved in the accident. You might also lose some discounts such as claim-free or safe driver discounts. Depending on the state you reside in, the accident would stay on your driving record for a period of 3 to 5 years. Hence, your insurance premiums would be adversely affected for that period.
Increase in Premium Charged
Since the accident claim increases your risk to the insurance company, they’re able to charge you higher premiums. It’s important to bear in mind that insurance companies have a point system for setting premiums. The increase in premium for the first reported accident is 10 to 15 percent, while the increase for a second accident is 20 to 30 percent. You would also end up paying more than this percentage if you’re no longer eligible for previous discounts. Insurance companies consider a variety of factors in setting insurance rates, such as your driving record, age and gender. Moreover, if you’ve been a policy holder with the same insurance company for several years, your first claim is usually forgiven.
You should consider whether it’s worth filing the claim if the damage to your vehicle is minimal, if your car is not very expensive and if you have a high deductible on your insurance. It’s best to consult your insurance company before you file the claim, to find out how the accident damage claim will affect your policy. If the claim will result in increased insurance premiums over an extended period of time, it might be cheaper to pay for the damages incurred to your car, yourself.