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Auto Insurance Claims and Their Effect on Premiums by Brian Cartwright

Many clients are reluctant to report claims on their auto insurance policies. Their single greatest fear is that it will increase their future premiums. Whether or not your rates will increase depends on multiple factors, including who your insurer is, how long you have been with them, what type of claim you are filing, and how many claims in the past that you have filed. If a claim is filed under your auto policy, and you have been with the company less than a decade, and you have had one or more past claims, there is a good chance that your premiums could go up. Because of this, many people try to avoid involving their auto carrier. Be careful, however. There is often one or more provisions in your automobile policy that requires you to report any loss and not prejudice the insurance company’s duty to defend you. If you fail to follow these provisions, and your failure results in the carrier being prejudiced, the insurance company may wind up denying coverage if you, the other party, or the other party’s insurance company winds up later filing a claim for whatever reason. For example, suppose you are involved in what you think is a minor fender bender. You don’t report the matter to your insurance company, you tell the other party that the car accident was your fault, and, in trying to be a good person, you verbally agree to pay for the property damage as well as the person’s damages resulting from the wreck. Now suppose that what the other party originally believed was whip lash actually was a herniated disk and, when you refuse to pay the thousands of dollars of medical expenses to treat the person’s injuries, you or the other party files a claim with your insurance company. There is a good chance that the insurance company could deny the claim, reasoning that you accepted liability, prevented the carrier from asserting any potential defense, and they are now stuck with paying the bill. At the end of the day, before you experience any loss, you probably should contact your agent and ask them what situations could result in your premiums being increased and by how much. You should also ask them what duties you have under the Policy as to reporting claims, the effect of not doing so, and what provisions in the Policy that set your duties and responsibilities in the event of a claim. I would recommend documenting who you spoke with, the date and time that you spoke with them, and what the person told you.

Brian T. Cartwright is Board Certified in Personal Injury Trial Law.