How Claiming on Insurance Affects Your Car Insurance Premiums

Have you been feeling the financial pinch over the past few months? If so, you have plenty of company. With food, fuel and electricity costs showing no sign of reducing soon, you'll want to find ways to recoup your losses or at least remove some of the sting in your wallet. Car insurance premiums are often the first thing on the chopping block. But before comparing car insurance quotes, you'll want to know how to keep your premiums low while improving your chances of scoring that long-awaited no-claims bonus. Discover how claiming car insurance can affect your car insurance premiums, as Auto & General discusses this in more detail. 

Understanding car insurance premiums

No matter which car insurer you go with, you can expect to pay a set monthly premium in exchange for a predetermined level of protection for your car. Insurers use complex underwriting software to determine your unique risk profile and monthly premiums[1]. This considers your age when you got your licence, your driving history, what car you drive and where you live. They combine this with your preferred coverage level and chosen excess to provide you with a premium you can expect to pay for the foreseeable future. Most premiums increase slightly every year to keep up with inflation. Insurers generally only reevaluate your car insurance premiums if your risk profile changes or you make an auto claim.

Claiming car insurance — the process and how it works

No matter what level of coverage you've chosen and what your excess is, there may come a time when you'll need to make an auto claim. Here's how this can play out:

Leslie is a 38-year-old woman who has been driving since she turned 18. A conscientious driver, she's paid her car insurance premiums for years without missing a payment or claiming car insurance. One day she's rear-ended at a stop sign, damaging her car boot. She stops to get the other driver's information and photograph the damage and accident scene. On her way home, she reports the incident at the local police station and gets the reference report to make a claim. She contacts her insurer's claims department with her policy details, the photos and the reference report to make a claim.

After determining that Leslie's car insurance premium payments are up to date and that the claim is covered under her insurance, they dispatch a claims adjustor to assess and investigate Leslie's claim and ensure her accident recount correlates with the car's damage. They also send Leslie's car to an approved service centre to determine what repairing the boot would cost.

Once it's determined that the value of the repair exceeds her excess, the insurers approve Leslie's claim — minus any deductible she needs to pay. She books her car in for repairs at the approved service centre, and once the deductibles have been paid, the insurer and service centre settle the claim directly with one other.

Impact of auto claims on your premiums

Now that you know how an auto claim process works, you'll want to know how it will impact your future car insurance premiums, claims and no-claim bonus going forward. You'll obviously have to reset your no-claim bonus period to zero. Many people automatically assume that their premiums increase once they make a claim. But this isn’t always the case. Your premiums aren't guaranteed to increase as it will depend on the following factors:

●      Who was at fault: Your premium may increase if you were at fault for the accident, broke the law, or violated a traffic rule (deliberately or accidentally). If the other impacted person has third-party insurance and you can claim from it, this may prevent your premiums from increasing.

●      How severe the claim was: Minor and commonplace claims are unlikely to raise flags with insurers or hike your premiums. Unusual or particularly expensive claims are more likely to do so.

●  How often you claim: A single claim lodged after a long period of not claiming is unlikely to increase your premiums. However, if you’re claiming car insurance often, this may affect your premiums, even if each claim is low in value.

Tips for keeping car insurance premiums from increasing after you claim

If keeping your premiums low or getting a no-claims bonus is a priority for you, there are alternatives and tips worth exploring:

●      Pay for it out of pocket: Even if your insurance covers a claim, you can still pay for a repair or replacement. This is suitable when the accident or damage doesn't involve another car, the repair work doesn’t exceed your excess, and it is affordable. For example, you may accidentally damage your tyres while driving over poorly maintained roads. In this case, your tyres may be at the end of their projected lifespan and need replacement anyway. Remember: even if you don't claim and pay for the repairs yourself, you must report a car incident to your insurer and the police.

●      Cover it under your car's warranty: Certain parts of your car are covered under the manufacturer's warranty, provided you’ve followed the service intervals and have the repairs done at an authorised centre.

●      File a third-party claim: If the person involved in the car accident has third-party insurance, you may be able to contact their insurer directly and claim from them for any damages.

●  Take out specialised insurance: If you're concerned about a particular type of risk, you can purchase specialised add-on insurance to cover more frequently anticipated claims and keep your primary insurance claim free. For example, you can opt for scratch & dent insurance, or tyre insurance.

Compare car insurance quotes from Auto & General

Being able to manage your insurance so that you don't make unnecessary claims can seem like a challenge with plenty of paperwork, terms and conditions, but it doesn’t have to be. Simply follow Auto & General’s expert tips regarding car insurance best practices. Apply for a car insurance quote online today. 

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[1] CarMag: Factors that will determine how much car insurance will cost

[2] Arrive Alive: Legal duties after a collision and road crash

Disclaimer: The information in this article is provided for informational purposes only and should not be construed as financial, legal, or medical advice.