Can I cancel my car insurance claim?

If you cancel a car insurance claim insurance companies will not issue any reimbursement, but the cancelled claim is not likely to raise your insurance rates.

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A former insurance producer, Laura understands that education is key when it comes to buying insurance. She has happily dedicated many hours to helping her clients understand how the insurance marketplace works so they can find the best car, home, and life insurance products for their needs.

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Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Jo...

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Reviewed by Joel Ohman
Founder & CFP®

UPDATED: Sep 20, 2021

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Here's what you need to know...

  • There are several reasons why you may choose to cancel an auto insurance claim
  • If you cancel a claim, that does not necessarily mean it will no longer be on your record
  • In some situations, especially if you were found to be at-fault in an accident, canceling your claim is not an option

Reading through any contract that you are entering into is crucial. Auto insurance companies lay out your coverage, and many people assume they know how it all works. It seems simple on its face. If you’re not familiar with your contract, though, you might miss important things. For example, some insurance companies can open a claim if you call about auto damage of any kind. This doesn’t mean they have to pay you, particularly if the amount of damage is near or below your deductible.

Since auto insurance is a contract and not just a product, reading through the policy booklet that describes your rights and your obligations is an essential thing to do. When you understand your insurance policy, you can avoid nasty surprises and get the most out of the claims you do file.

While insurance companies would like you to file damage claims with them, many people try to avoid claims on smaller accidents. They’ll even pay other drivers cash to avoid having it on their record.

Before you hastily file a claim, it is important to review your coverage options and to assess how much your payout would be. You might also look at the actual damage to decide how impactful it is.

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When should you cancel a car insurance claim?

There are many different reasons why a policyholder might be interested in canceling a filed claim, but one thing that all of these reasons have in common in the goal.

The ultimate goal policyholders have when they are filing claims is to save money and avoid falling victim to a rate increase.

Also, some may choose to cancel a claim simply because the claims process can be so stressful. Of course, if your car insurance company makes claims that stressful every time, you may want to consider switching auto insurance companies. You are paying for protection in the event that you need it while hoping that you don’t have to use it. What you might not know beforehand is that canceling a claim does not always mean that the claim will not be investigated before it is closed.

Here are some of the scenarios when an accident claim or comprehensive claim might be best suited as a closed claim:

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Your High Physical Damage Deductible Exceeds the Payout from Your Insurance Company

Carrying a high deductible on comprehensive and collision coverage is a great way to save on your premiums. With a high deductible, you take on a larger portion of the loss. It means you’re willing to pay claims up to that dollar amount on your own.

In exchange for paying more out-of-pocket, you will get a discounted rate.

There is less risk of the insurer having a claim where a payout will be made.

While a high deductible can be a money saver, many people will choose the highest possible option without actually understanding how their deductible works.

It is not until they file their claim, and they have the damage inspected and repairs estimated that they will discover the company will not pay for minor collisions. The deductible you choose is the deductible you have to pay each time you file a claim.

You Cannot Afford to Pay Your High Deductible

Another problem that can arise with high deductibles is that the insured is required to pay the deductible before there is a payout. If you cannot pay your deductible, major repairs could be delayed leaving you without a car until you can pay your deductible.

If you are willing to put away the money you save away to use, raising your deductible could be a good option. If you’re looking for a way to save money because you cannot afford a smaller deductible with the coverage amount you want, you could end up in trouble when an insurance adjuster gets involved after an accident.

If you have a loss and just cannot come up with the money to pay for the portion that you are responsible for, canceling the claim and dealing with the damage at a later time seems like a viable option. Unfortunately, you would not be able to make a claim for damages at a later time leaving you on the hook for the whole

You Want to Avoid the Claims Process

If you have never filed a claim, you might assume that the process goes very quickly.

You might believe that you are not at-fault for a loss just to discover that your adjuster has been going back and forth with the other company to agree on a fault determination.

Even minor claims can take weeks or months to settle when there are no witnesses, and each party is giving different accounts. Dealing with the claims process and answering questions over and over might be enough to entice you to close the claim. Of course, if you have collision coverage or comprehensive coverage depending on the type of damage, your claim would be settled by your insurance company regardless of fault. Then your insurance company would settle the difference with the other insurance company or party. They may still require your cooperation in answering questions about the incident, though.

Unfortunately, many times claims have to be thoroughly investigated before they can be closed with a $0 payout.

You Do Not Want the Claim on your Record

Canceled claims may not cost the insurer money, but the claim will stay on your driving record. When a claim is filed, the claim will be stored in the computer system. You can appeal it each time you get a quote from another company, but there’s no guarantee they’ll accept your appeal when issuing a new insurance policy.

It will also be reported to the CLUE Database.

This database shows all of the losses a policyholder has had in the past no matter how much the payouts were. Claims that are withdrawn are still on your record for years to come.

If you report that you have never had a loss, doing so could be a misrepresentation. While a zero dollar claim does not usually lead to surcharges, they can affect accident-free discounts, which is a critical consideration before filing.

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Can a company stop you from canceling auto insurance claims?

If you have a loss that you are at-fault for, the claim may stay open for months or years — especially when a third-party has reported injuries and is seeking medical treatment. Typically, an insurance company will try to close claims as quickly as possible whether that means paying or denying the claim. Drawn out processes are more common than many would like to believe.

The claim to repair your vehicle with your collision coverage may be withdrawn, but the claim for Bodily Injury Liability cover will stay open until the injured party has fully recovered. Unfortunately, if your insurance company has paid out even a small amount, the insurance adjuster will have to resolve your claim to a certain point.

You will face a rate increase once your policy renews because you caused injuries while you were operating your vehicle.

You also have to reassess whether or not to cancel a claim for damage to your car when the damage is severe.

You may be required to show that the car was repaired, or the insurer may drop the coverage entirely.

Insurance companies want to pay as little as possible on claims. They welcome policyholders who want to cancel claims in the right situations.

If you are not happy with the service your insurer has provided, you might want to begin to shop for a new plan.

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