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How many auto insurance claims is too many?

Things to know...
  • Auto insurance companies are unlikely to cancel your coverage because of the number of claims you file, but they may not renew the policy
  • Several claims within a short period of time may also result in a rate increase
  • If you cannot find auto insurance coverage while shopping around, you may need to consider high-risk options

Many drivers have heard that their car insurance policy may be canceled or their insurance rates may increase if they file several claims within a short period of time.

However, friends and family who share this advice or wisdom with you may not know exactly how many claims is too many and within what period of time.

If you are thinking about filing a claim now or if you need to file one, you may be wondering what reaction to expect from your car insurance provider.

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The Differences Between Cancellation and Non-Renewal

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Drivers should be aware that there are specific reasons why a car insurance provider can cancel your existing policy. These include failure to pay the premium, fraud, and the suspension or revocation of your driver’s license.

While a cancellation is unlikely to occur simply because you file numerous claims within a short period of time, there is a possibility that the provider will not renew your coverage at the end of the term.

Car insurance providers must give you adequate notice of their intent to not renew coverage so that you have time to shop around and compare the various options available.

Remember that it is illegal in most areas to drive without at least a minimum amount of coverage at all times. If you receive notice that your coverage will not be renewed, you should start comparing rates online today to find a great deal on coverage with a new provider.

– Disputing a Non-Renewal or Rate Increase

If you have recently learned that your coverage will not be renewed or that the rate will increase because of the number of claims that you have filed or because of the severity of the claims, you may be wondering if you can dispute the claim.

It is possible to dispute the claim through the state insurance department or even directly with the insurance provider.

However, remember that each provider reviews your driving record and claims history differently. Even though one provider will no longer insure you or will charge a higher rate, you do not necessarily need to expect this with every insurance company you reach out for a quote.

Determining If You Need to File a Claim

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The impact of filing a claim can be critical to your future policy renewal options and the potential rate at renewal.

With this in mind, you should carefully review the need to file a claim before making a snap decision. By focusing your attention on a few important points, you can better decide if filing a claim is necessary or beneficial.

Remember that the other party in an accident may file a claim against your policy regardless of whether you want them to or not if you live in a tort or at-fault state and are at-fault for the accident.

In many minor instances and in no-fault states, however, filing a claim may not be necessary.

– Review Your Deductible Amount

The first step to take when determining if you need to file a claim against your policy is to understand your deductible amount.

This amount is established by you when you purchase the coverage. While it typically is $500, it can range from a few hundred dollars to $1,000 or higher.

You must pay the deductible out-of-pocket each time you file a claim, so you can consider this as your portion of the repair costs for your vehicle.

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– Get an Estimate for the Repair Cost

If the repair cost is close to or less than the deductible amount, it may not make sense to file a claim. Getting an estimate on the repair cost for your vehicle up-front can help you to make a better decision about whether or not to file a claim.

For example, if your damage is $700 and your deductible is $500, the value of filing a claim is the $200 of damage that the insurance company will pay.

In this case, you must pay at least $500 in repair costs, and you could pay an additional $200 will prevent you from having to deal with the effects of a claim filed against your policy.

– Focus on the Vehicle’s Value

A final factor to consider is the vehicle’s value. If your vehicle’s value is low and is close to the repair cost, there is a possibility that your provider may total out the vehicle.

You would receive a payment for the replacement value of the car rather than the repair costs, and this amount may not be sufficient to replace the vehicle or to repair it.

Remember that this settled amount will include a deduction for the deductible amount.

– Prepare for a Rate Increase

If you choose to file a claim, you should prepare for a possible rate increase or a non-renewal. Both of these possible scenarios may result in the need to shop around for a lower rate.

Keep in mind that most, but not all, providers will allow at least one or two claims within a few years before they consider a rate increase.

Shopping for New Insurance

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A non-renewal can be intimidating, and you may fear that you will not be able to get coverage from other providers if this happens.

However, other traditional car insurance companies may still insure you even if one company does not because each provider reviews factors like your claims history and driving record differently.

Comparing rates online is a fast and easy way to explore the options, and you may benefit from requesting at least three or four quotes from leading providers.

– Explore High-Risk Insurance Options

If you cannot find insurance through traditional providers, rest assured that you have a few other options to consider. One idea is to reach out to a high-risk insurance provider.

The other option is to join your state’s assigned risk pool. Both can yield higher rates, but you can at least obtain the coverage needed to comply with your state’s requirements.

Taking Advantage of Your Coverage

In order to take advantage of the financial benefits associated with your policy after a damaging event, you need to file a claim.

If the damage is extensive or severe, you should consider filing a claim even if you have recently filed one or more other claims. Review all options carefully before deciding how to proceed.

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