What Happens If You Have Multiple Insurance Claims

Two people involved in an accident assessing the damages
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Whether due to an unexpected series of storms that leave your car twice riddled with hail, multiple small accidents in short succession, or just bad luck, you may be caught in a situation where you experience multiple incidents that need repairs and require filing a claim with your insurance company. Understanding the claims process and how multiple insurance claims will affect you will empower you to make tough decisions. Take the time to learn about car insurance claims before you need to file so you are prepared for what’s ahead.

Multiple Claims and Deductibles

It really does not matter if you have two car insurance claims within the same week or a year apart. All claims made within a three-year period are considered “multiple claims” on your claim history by your insurance company.

Multiple claims that occur really close together may bring up questions about deductibles. For instance, say you have been procrastinating on getting your cracked windshield replaced and now a deer has run into the side of your vehicle. You want to save time and address both issues by having both your windshield and the damage caused by the deer repaired at the same time. Unfortunately, even though both are comprehensive claims, they are separate incidents. You will have to pay two deductibles if your policy is set up with a deductible on comprehensive coverage.

Normally, when your vehicle is damaged at two separate times by two separate causes, your full deductible will apply to each occurrence. However, it is possible for exceptions to be made in the case of storm damage. If your car is damaged by hail and a tree branch falls on your vehicle during the same storm, your insurance company might be willing to charge a single deductible because the same storm caused the damage.

Typical Guidelines for Preferred Insurance Carriers

In addition to how frequently you have filed claims, the types of claims you are filing also matter. Consider who is at fault and the amount of damage before filing a claim. It can make a huge difference in your decision to file.

  • At-Fault Claims: Two at-fault claims caused by the same driver within three years can be grounds for non-renewal by many preferred insurance carriers.
  • Claims: In most states, claims you file against another driver are not seen by your own insurance carrier because the claim is filed against the at-fault party’s policy. The rules change in the state of Michigan because of its complicated no-fault law. There, even claims made against another party are filed against your car insurance policy. Most preferred carriers surcharge for three or more claims filed within a three-year time period.
  • Comprehensive Claims: Typically, multiple comprehensive claims do not affect your insurance rate unless you file three or more in three years. It really depends on how your insurance carrier treats comprehensive claims. Some insurance carriers charge for all comprehensive claims, although most still do not. Read your policy for specifics.

How to Avoid Multiple Claim Penalties

  • Be Careful: The worst claims to file are at-fault claims. Minimize distracted driving, stay off the roads when the weather is bad, park your car in a garage or under a carport, and keep your car in tip-top shape.
  • Pay for Claims Yourself: Obviously, paying for damage to your vehicle out-of-pocket is not what you want to do. However, sometimes it is the cheapest overall option. One claim is stressful enough; throw in multiple claims and you really could be pulling your hair out. The best advice is to deal with one claim at a time. Evaluate the costs of paying for damage yourself vs. filing a claim—both short-term and long-term—and remember that multiple claims in a short period of time could signal to insurers that you are high-risk, causing a rate increase.

The good news is that it is highly unlikely that your insurance company will cancel your policy outright because of multiple claims. The bad news is that multiple claims may cause your insurer to raise your rates or decide not to renew your policy at the end of your policy period.

So, the first order of business is to be clear on the difference between cancellation and non-renewal.

  • Cancellation: Cancellation means your insurance company terminates your policy before the end of the policy period. If your insurance company is going to cancel your policy, it will likely do it within the first 60 days. Insurance companies will cancel at this time if you misrepresented yourself or gave false information on your application. The most likely reasons for your insurer to cancel your policy after 60 days are non-compliance with the terms of your policy or non-payment of your premium. Filing several claims, however, will not result in the cancellation of your policy, as long as the claims are not fraudulent. But if you lied on your insurance application or filed a fraudulent claim, you can almost guarantee that your insurance company will find out and that they will cancel your coverage as a result.
  • Non-Renewal: Non-renewal refers to being dropped by your insurer at the end of your policy period. There are many reasons why your insurance company might not renew your policy, including filing too many claims. In fact, in most cases, you can be dropped for any reason except for your age, race, gender, marital status, occupation, or physical handicap, all of which are considered discriminatory reasons and are protected by law.

Reasons for Non-Renewal

Insurance companies are in the business of signing and keeping clients, and won't usually drop you for just one accident. But if they determine that you are a “high-risk” driver, one who is frequently caught speeding or driving recklessly, then you can probably anticipate a non-renewal of your policy. You're just not a good bet for them to insure.

If you’re a relatively safe driver who has simply had the bad fortune of having a couple of fender benders in the last couple of years, then you are probably safe.

Here are a few typical reasons for an insurer to drop you.

  • Bad driving record—Insurance companies pay attention to your driving record. If you receive a high number of traffic violations in a short time, your insurer may decide that you are too great a risk and drop you.
  • DUI or DWIDrivers with a DUI or DWI conviction are always considered a greater risk. This is a big reason for non-renewal.
  • Delinquent premium payments and fraudulent claims—Insurers will non-renew or cancel your policy if you don't make the payments or if you file fraudulent claims.
  • Too many at-fault accidents—If you’ve been involved in three or more accidents within a three-year period for which you are liable, you may be dropped.
  • Too many claims—Your insurance carrier may consider dropping you simply because you file too many claims, regardless of severity or fault. The simple truth is that insurers are in business to make money, and if they have to pay out more to you than they are bringing in from your premiums, they will probably drop you from their rolls.

The answer is: It depends. It can vary by the insurance company, by type of accident, even by state. When an insurance company decides to renew or non-renew a policy, it considers several factors, one of which is the number of claims the client has made.

Many insurance carriers will non-renew a car insurance policy if there are three or more at-fault claims are filed within a three-year period. It's best to remember: the fewer the claims, the better.

Avoid Being Dropped by Your Insurer

Image shows a man driving a small yellow car. Text reads: "Ways to avoid being dropped by your car insurance: don't make a claim if possible; pay your bill on time; drive safely; don't lie"
Bailey Mariner © The Balance 2020

There are several things that you can do to maintain a “low risk” status and reduce the chances of your insurance coverage being canceled or non-renewed.

  • Drive safely
  • Pay on time; don’t get behind in your premium payments
  • Don’t lie about your claims
  • Avoid making a claim unless necessary

Remember that auto insurance laws vary significantly from state to state. If you have been dropped by your insurer or are afraid that you are about to be, check the laws regarding cancellation and nonrenewal in your jurisdiction.