Whether due to a series of storms, a few minor fender benders in a row, or just bad luck, you find yourself at the repair shop again. When that happens, chances are you'll be on the phone with your car insurance company.
Filing one claim can be a chore. But, filing more than one takes some thought and care. Get a handle on the claims process. Learning how multiple claims might affect your bottom line can help you to make tough choices about your policy.
Here we cover what's going on behind the scenes when you file a car insurance claim, and what you should know before you file, so you can be ready 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 span of three years will show as “multiple claims” on your claim history.
Multiple claims that occur close in time may bring up questions about deductibles. For instance, say you have been stalling 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. Both will fall under the comprehensive part of your policy. But, since they are separate events, if your policy is set up with a deductible on comprehensive coverage, you may have to pay two deductibles.
Most states mandate collision coverage at the very least. This covers the damage to your car if you collide with a car or other object. Comprehensive coverage (as the name implies) goes further to cover damage from weather, theft, or anything other than a collision.
Most of the time, when your vehicle is damaged twice by two separate causes, your full deductible will apply to each event. This can vary in some cases, such as storm damage, which can be treated as an exception. If your car is damaged by hail and a tree branch falls on your car during the same storm, your carrier might be willing to charge a single deductible because the same storm caused the damage.
Standard Guidelines for Preferred Carriers
Along with how often you have filed claims, the types of claims you file also matter. Think about who is at fault and the total amount of damage before filing a claim. These factors can have a huge impact on whether you decide to file.
- At-fault claims: If you are found to be at fault for two or more claims within three years, your carrier may use this fact as grounds not to renew.
- No-fault claims: In most states, claims you file against someone else are not seen by your own carrier. This is because the claim is filed against the at-fault party’s policy. Most preferred carriers surcharge for three or more claims filed within a span of three years.
- Comprehensive claims: More than one comprehensive claim should not affect your rate, unless you file three or more in three years. It really depends on how your carrier treats comprehensive claims. Some charge for all comprehensive claims, although most still do not. Read your policy for details.
A few states have complex no-fault laws. In Michigan, for instance, even claims made against the other party are also filed against your own policy.
How to Avoid Multiple Claim Penalties
- Drive with caution: The worst claims to file are at-fault claims. Do not engage in 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 out of pocket: Of course you don't want to pay for damage to your car on your own. But it might the cheapest option. One claim is stressful enough; throw in more than one and you really could be pulling your hair out. The best advice is to deal with one claim at a time. Assess the costs of paying for damage on your own vs. filing a claim, both in the short- and long-term. Note that more than one claim in a short amount of time could signal to insurers that you are high-risk, causing a hike in your rate.
The good news is that your carrier won't just cancel your policy outright if you file multiple claims. The bad news is that more than one claim may cause your insurer to raise your rates or decide not to renew your policy at the end of your term.
Cancellation vs. Non-Renewal
So, before choosing to file that second or third claim, make sure you are clear on the difference between cancellation and non-renewal, and when your insurer will take each action.
What Does It Mean if My Policy Is Cancelled?
Cancellation means your insurer ends your policy before the term is over. If your insurer is going to cancel your policy, it will most often happen within the first 60 days. Insurance companies have grounds to cancel at this time if you gave false information on your application. The most common reason for your insurer to cancel your policy after 60 days is non-compliance. This means you failed to follow the terms of your policy contract or failed to pay your premium.
Filing more than one claim should not result in the cancellation of your policy, as long as the claims are valid. But if you lied on your application or filed a fraudulent claim, or commit any other type of fraud, you can be almost certain that your carrier will find out. They will cancel your coverage as a result.
What Does It Mean if My Policy Is Not Renewed?
Non-renewal refers to being dropped by your insurer at the end of your payment term. One reason this might happen is if you failed to pay your premium. Quite simply, paying your bill each term assures it will renew.
There are many other reasons why your carrier might not renew your policy, and indeed, filing too many claims is one of those reasons. 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.
Risky Actions That May Affect Your Policy
Insurance companies prefer to sign and keep clients, and most of the time they won't drop you for just one accident. But if they decide that you are a “high-risk” driver, one who is often caught speeding or driving recklessly, then you can expect some pushback. You're just not a good bet for them to insure.
If you’re a mostly safe driver who has simply had the bad fortune of having a couple of fender benders in the last couple of years, then you don't need to worry.
Here are a few common reasons for an insurer to drop you.
- Bad driving record: Insurers will look very closely at 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 DWI: Insurers always consider drivers with a DUI or DWI a greater risk. This is a big reason for non-renewal.
- Late payments and fraudulent claims: Insurers will cancel or refuse to renew 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 span for which you are liable, you may be dropped.
- Too many claims: Your carrier may decide to drop you simply because you file too many claims, no matter how severe the claims are, or who is at fault. The simple truth is that insurers are in it to make money. If they have to pay out more to you than they are bringing in from your premiums, they much prefer to drop you from their rolls.
It's hard to predict fully whether filing one more claim will affect your policy, since rules can vary by insurance company, by type of event, and even by state. When an insurer chooses whether to renew, not to renew, or to cancel, it looks at many factors, one of which is the number of claims the client has made.
Many insurers will choose not renew a policy if there are three or more at-fault claims are filed within a span of three years. And of course, the fewer the claims, the better.
There are many things that you can do to maintain a “low-risk” status and keep your coverage in good standing:
- Drive safely
- Pay your premium bill on time
- Don’t lie about your claims
- Avoid making extra or very minor (cheap) claims