4 Factors Insurance Companies May Consider When Determining Post-Claim Premium Increases

Posted on: 1 March 2022

The consensus amongst many people is that if you have a car accident, you can guarantee that your auto insurance premium will increase. However, if you take a closer look at the way insurance companies sometimes assess accident claims, you might discover that this practice can apply to some situations, but not all of them. Learn more about the factors that insurance companies sometimes use when evaluating claim-induced premium increases.

1. Driving History

There is no such thing as the perfect driver, so do not assume that insurance companies expect you to live up to an unattainable standard. The very pretense behind an accident is that it was not intentional. Insurance companies assess the overall driving history of the policyholder before activating an automatic rate increase. So, if you are someone who has a clean driving record and has not had an accident in years, there is less of a need to worry.

2. Claim Value

Insurance companies operate risk-based businesses, so the greater the risk, often, the higher the premium. One factor used to evaluate the risk of a policyholder is the value of the claim that was paid out. For example, a high-value claim is often the result of a serious accident with significant damage, which may prove to be an increased risk. On the other hand, a smaller claim might be viewed as a lower risk. 

3. Overall Claim Record

An important fact for all auto insurance policyholders to keep in mind is that auto insurance companies often have access to your claims record with other insurance types, such as homeowners' insurance. For this reason, if a driver with few—if any—previous claims with other insurance products gets into an automobile accident, they are likely to be at a reduced risk of a rate increase. Again, it all comes down to risk, and fewer claims overall can translate into fewer risks.

4. Special Policy Add-Ons

Drivers who take advantage of special policy add-ons, such as accident forgiveness, often have the luxury of worrying less about a policy increase after an accident. As part of this policy addition, accident claims are essentially a non-factor and not held against you. Keep in mind that the terms of these add-ons vary across insurance companies, so be sure to get information specific to your policy.

If you have specific questions about how your auto insurance policy and premiums will reflect your claim history, be sure to speak with an insurance professional for a thorough assessment.