Everybody wants to pay the lowest auto insurance premiums possible. Many people do not realize that previous claims affect premiums. There are three distinct claim factors that determine insurance rates. Knowing about these factors can help you decide which claims are worth submitting should the need arise in the future.
Your driving history is a major factor that influences insurance rates after you submit a claim. If you have a history of causing accidents or moving violations such as speeding, your post-claim premiums will be higher. Certain insurance companies offer "accident forgiveness" to drivers involved in minor accidents who otherwise have a clean driving record. Your rates will still increase but not as much as they could.
Each state has its own rating system that insurance companies must follow when setting rates. Risk is the primary determinant that insurance providers measure all factors against. Each time you submit a claim, you pose a higher risk to be insured. More risk means higher costs. Insurance companies must pay for a claims adjuster to review your claim. And claims adjusters have costs such as travel and supplies. Costs associated with claims are covered by you through higher premiums.
One of the reasons insurance companies ask for the make and model of your vehicle is to ascertain potential costs if you submit a claim for damage or loss. Insurance providers use the risk assessment information provided by Insurance Services Offices, Inc. (ISO) in rate calculations. ISO assigns an ISO symbol to every type of domestic and imported vehicle to indicate the vehicle's value in terms of replacement and repairs.
Vehicles with high ISO symbols will cause your insurance premiums to be higher. And if you submit a claim on such a vehicle, your future premiums will be even higher. ISO symbol values are built-in to the insurance company's rate calculation - it is not something insurance agents have discretion to determine on an individual basis.
Fraud and Scams
Even if you do not commit insurance fraud yourself, your insurance premiums are affected by the fraud perpetrated by other auto insurance customers. Insurance companies lose billions of dollars annually to fraudulent claims - and those costs are passed on to you. The average auto insurance premium can increase several hundred dollars each year because of fraud.
Do what you can to mitigate these claim factors. And do not forget that you can always shop around for other auto insurance options!