Zaneta Wood, Ed.S. has over 15 years of experience in research and technical writing bringing a keen understanding of data analysis and information synthesis to reach a wide variety of audiences. She studied adult education and instructional technology at Appalachian State University as well as technical and professional communication at East Carolina University. Zaneta has prepared technical p...

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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 15, 2020

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It’s all about you. We want to help you make the right coverage choices.

Advertiser Disclosure: We strive to help you make confident insurance decisions. Comparison shopping should be easy. We partner with top insurance providers. This doesn’t influence our content. Our opinions are our own.

Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.

Here's what you need to know...

  • Your insurer will only penalize you for an accident where you are found to be at-fault
  • Accidents will stay on your record for three years in many states, but seven years in some states
  • Infractions contribute to your driving history, which insurers look at to determine rates
  • If you are at-fault in an accident, your premiums will rise regardless of the amount of damage you cause

Consumers buy auto insurance to satisfy state laws and also to protect themselves from the financial loss.

Unlike most of the products or services that you buy from retail stores or other providers, car insurance is one of the few products that you want to use because it means that you have suffered a loss.

Car insurance is used to protect you from financial loss when you face a situation where filing a claim is the only option. When you have to use it, you will be happy you have it.

Start comparing car insurance rates now by using our FREE quotes comparison tool!

Table of Contents

#1 – How will a car insurance claim affect your car insurance rates?

Not all claims will affect your insurance policy, but those that do can increase your rates significantly.

Many people are reluctant to file claims on their policies because they simply do not know which claims are going to end up costing them money for the years to come.

As soon as you file that claim, your insurance provider will help you in several ways:

  • They will act as your advocate and speak with the other party or their representative
  • They will tow your vehicle to a safe place
  • They will arrange appointments with repair facilities
  • They may possibly even set up a car rental for you so that you can get to and from work

Having the right coverage will pay off and make life easier when it comes time to pay repair bills or rental invoices, but all of this may come at a cost.

Even though you have paid your insurance premiums regularly for coverage, having an accident on your record and filing a claim can affect your rates in the future.

If you have minor damage, it might be in your interest not to file a claim at all. After all, if a rate increase following an accident is more than the cost of the damage, you will regret filing.

Insurance companies can only legally raise your premiums when you are found to be at fault for the loss.

This is why non-fault comprehensive claims for damages sustained while a vehicle is parked do not affect the policyholder’s rates at all. It is collision claims, where the vehicle was moving and collided with another vehicle, that can become more difficult to assess fault.

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#2 – How does fault affect whether a claim is chargeable?

Since fault is ultimately what determines which party will pay higher insurance rates, it is very important that you collect all of the information the claims adjuster needs.

If you are obviously not at fault for the accident, your premiums will not even be affected. If you are, however, egregiously at fault then your premiums will likely go up dramatically.

#3 – Does the percentage of fault matter?

It might be easy to understand the difference between at-fault and not-at-fault, but many times companies will settle a claim as shared fault. It is possible for you to contribute to a loss that you were found to be not at fault for.

Any claim where you are a driver is considered to be 51 percent or more at fault is deemed to be a chargeable claim.

When there is contributory fault, you may have played a part in the cause but were not primarily responsible.

Even if it is found that you are 50 percent responsible, as long as the percentage is below 51 percent you will not be charged for the claim.

This can be reassuring to people who are sure that they did not play a part in the cause or played just a minor part when they want to file a claim.

#4 – How much will the rates go up?

If you are found to be the negligent party in a loss, how much your rates go up will depend on several different factors. An accident is only chargeable when the damages meet a state threshold or when there are injuries.

Claims for bodily injury will have a greater effect than claims for just property damage.

How much your rates will go up is based on the following factors:

Factors that Affect Premiums 
Your ageYounger drivers with less experience tend to pay higher rates
Your stateAverages vary greatly between states
Whether there were injuriesInjuries present will make your rates increase even more
History of accidents and ticketsA blemished driving history shows an increase risk for more problems, so your premiums will increase even more
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There is no way to find out exactly how much a claim will increase your rates until it is filed, but there are studies that show averages.

For people who file just one claim, the average increase is 41 percent.

Filing two claims in one year can lead to an increase of 93 percent on average.

Losing an accident-free discount can create an even larger blow because these discounts offer as much as 20 percent off of the entire policy.

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#5 – How long can the claim affect your driving record?

Whenever you apply for insurance, the company will run your accident history and your motor vehicle report to find out if you have any at-fault accidents.

Having accidents can affect your quotes and your eligibility for insurance. It is nice to know that filing a claim is not going to haunt you for life.

In most states, car accidents and reported claims will fall off of your record after three years. In some states the drop off period is after five years.

It is important that you know that some companies will ask for you to list accidents that are as far as seven years back. You must still be honest while doing this so that your quote is accurate.

You will not be charged for the loss, but may not get certain discounts based on the state eligibility rules.

Surprisingly to most, if you have an accident that results in $30,000 of property damage, you will pay the same premium surcharge as you would if the damage was only $2000.

If you had an accident and you feel like your rates are too high, now might be the time to begin shopping.

Start comparing car insurance rates now by using our FREE tool below and you can instantly find out how much you will pay through other insurers.

How long do car insurance companies keep claim records?

The CLUE database typically keeps records of all car insurance claims for seven years, but open claims or those suspected of fraud will be saved longer.

  • Deciding which car insurance company is best for you takes time
  • Compare at least three companies before making a decision
  • Weighs the pros and cons of each before signing on the dotted line

Applying for car insurance involves a great many steps. Wise consumers shop for insurance the same way they should for any other purchase, carefully compare prices and features from company to company.

The first thing to do is collect information about at least three insurance companies. Statistics say that it is possible to save up to 15 percent on your car insurance premiums through comparison-shopping. Comparing between the way the different companies handle rates, discounts, driving history, and more can help you make the best decision.

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Steps to Get Estimates of Cost for Car Insurance

Step 1: Choose the companies you wish to approach – confirm with your state’s insurance department that each of them is licensed within your state.

Step 2: Determine the limits and types of insurance coverage that are required in your state, and assess the financial protection you need.

Step 3: Consider purchasing physical damage on your own automobile – comprehensive and collision can help you repair or replace your vehicle.

Step 4: Decide on a deductible that makes sense for you and your lender, if there is one.

Step 5: Complete an application using the same criteria for each company.

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What information is necessary for an application?

When applying for car insurance, there is a lot of information needed to get an accurate quote. Make sure to be honest because they will find during the underwriting process.

You are expected to answer the following questions:

Personal Information

  • Driver’s name, license number, date of birth, and marital status
  • Home address including city, state, zip code, and phone number
  • FAX number, if you have one
  • E-mail address
  • Vehicle garaging address including city, state, and zip code
  • Same information for each additional driver

Prior Insurance Coverage

  • How long you have had continuous insurance.
  • Prior insurance company’s name
  • Prior policy number and expiration date
  • Prior insurance claims with dates of occurrence

Vehicle Information

  • Vehicle year, make, model, and license number
  • VIN number
  • Odometer reading
  • Annual mileage

Cautions about Questions

There is a temptation to ‘fudge’ information in order to save money on insurance, but it is necessary to be careful not to do so because it can affect your insurance coverage resulting in a denied claim or revocation of your policy.

  • Report all drivers for the vehicle. It is a temptation to skip teen drivers and those with a great many traffic tickets. If this person is involved in an accident and not listed on your policy, coverage may be denied or the policy slated for cancellation
  • List the actual parking address for your vehicles. A garage is safer, but if you park on the street, mention it so if the vehicle is damaged by a drive-by accident, the coverage is assured
  • Report the mileage on the vehicle accurately. If you are involved in an accident, the mileage on the vehicle can reflect more usage than is expected
  • Be sure to tell about driving infractions because they will be discovered by the insurance company through DMV checks and this can lead to higher premiums
  • Update your policy information when your life situation changes. A new job with a longer commute, adding another driver, or not reporting a minor accident can cause your premiums to increase or coverage to be denied

How long do insurance companies really keep data on claims?

All insurance companies maintain a relationship with a database that keeps track of insurance claims. The most common database is called Comprehensive Loss Underwriting Exchange, or CLUE.

Insurance companies’ claims department automatically enter class details into this database once a claim is completed.

This database and many others keep information on claims for seven years.

If the insurance company suspects fraud for one reason or another, the records are kept longer. Insurance companies are being more cautious about fraud because it is costing them — and you, as a policyholder, a great deal of money.

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Choosing an Insurance Company

Since you have already determined that the insurance companies you are examining are licensed within your state, examine the financial health of the insurance companies.

There are three common sources for information about the financial health of insurance companies:

Your state’s insurance department can give you an idea of how the insurance companies handle claims. Records are kept to allow you to see how the company handles claims. The NAIC also has that information in their records, sorted by insurance company.

The NAIC also has that information in their records, sorted by an insurance company.

Carefully consider as you purchase insurance because it is a large portion of a family’s budget. After you receive the estimates or quotations, ask questions about discounts that particular insurance company may offer.

Start comparing car insurance rates now by entering your ZIP code in our FREE tool below!

References:

  1. http://www.iii.org/issue-update/compulsory-auto-uninsured-motorists
  2. http://www.iii.org/article/if-i-file-claim-will-my-premium-go
  3. http://finance.zacks.com/much-minor-accident-affect-auto-insurance-rate-7262.html
  4. http://www.insurance.ca.gov/01-consumers/105-type/95-guides/01-auto/auto101.cfm
  5. http://www.cbsnews.com/news/heres-how-much-your-rates-could-rise-after-an-accident/
  6. http://budgeting.thenest.com/long-accident-stay-insurance-32185.html