Auto Insurance Claims Costing the Most

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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: May 21, 2020

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Here's what you need to know...

  • Different claims cost different amounts
  • Insurance companies use a system to determine what will be paid out following a claim
  • Your driving history and claims history will affect your premiums
  • The average property damage claim in 2018 was $3,841.

While making any kind of claim on a car insurance policy will most likely affect the policy premium, certain claims will increase the policy rates more than others.

For example, an accident claim will affect car insurance rates more than a speeding ticket, and an accident claim in which the policyholder is at fault will increase the car insurance rates more than if someone else is the cause of the accident.

It is very important to try to avoid having to make claims on car insurance, but sometimes the situation is unavoidable.

In the case that you have to make a claim, it is best to have a car insurance provider that is already giving you a lower rate, so if the rates are raised it will not seem like too much.

Researching car insurance companies with A.M. Best and even the Better Business Bureau is a great way to learn more about a provider.

Enter your ZIP code into the FREE tool above to compare car insurance rates today!

What do car insurance companies consider when a policyholder makes a claim?

It is important to understand how an insurance provider approaches claims.

By understanding how the process works, the policyholder can be prepared for any significant rate raises and will not be taken off guard if their rates are raised after a claim.

When someone files a car insurance claim there are typically three things the car insurance company looks at that will affect the policyholder’s car insurance rates. These three things are:

  • ISO symbols
  • Policyholder’s driving record
  • Insurance fraud

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Enter your ZIP code below to view companies that have cheap car insurance rates.

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What are ISO symbols?

The term ISO stands for Insurance Services Offices. It is very important for car insurance providers to have a universal system for deciding how much it would cost to fix a vehicle after it is damaged in an accident.

The ISO symbol system is the way in which car insurance providers determine these amounts.

The ISO system assigns a number to every car that is made in the United States and throughout the rest of the world.

This number is determined by the value of the vehicle. The more the vehicle costs and the more advanced safety features and technology features the vehicle has, the higher its ISO symbol will be.

A high ISO symbol indicates that it would cost more to replace or repair that vehicle. So when someone applies for a car insurance policy with a provider, that provider looks up the person’s car’s ISO symbol.

If the ISO symbol for that car is high, the annual premium for that car will be high as well.

Also, if that car is then in an accident, the claim will raise the policyholder’s rates more than it would with a car with a lower ISO symbol because it will cost the insurance provider more money to repair it.

How does a person’s driving history affect their rates after a claim?

A person’s driving record is one of the most important things an insurance provider looks at when they are first determining that person’s insurance premium and when that person files a claim.

A person’s driving history is filed with the state in which they live and regulated by that state.

When somebody applies to an insurance provider for a policy, the insurance agent will look up their driving history in the system and determine the type of coverage they need, along with their rate.

The most important factor in a person’s driving history is how many accidents they have been involved in.

Were they the cause of that accident and does their driving history suggest they will be involved in more accidents in the future? If so, their car insurance rate will be higher right from the start because they are a greater risk for the company to insure.

Some people think that when they are in an accident, the only cost the insurance provider has to consider is the cost to repair the damaged vehicle. This is not the case.

Filing a claim sets off a chain of events that cause the costs to add up.

When the driver first calls their insurance company to file a claim, they will end up talking to someone who, depending on the size of the insurance company, most likely just handles taking claims.

That person’s salary and the salary of the claims adjuster that evaluates the claim is an added cost to the insurance provider.

How does insurance fraud affect car insurance claims?

Insurance fraud is a large burden to the insurance industry. If there were no insurance fraud, everyone’s car insurance rates would be much lower.

A large number of accident claims are actually staged and are devised to scam the insurance company out of money. The high rate of fraud seriously affects everyone’s rates before and after a claim.

Compare car insurance rates by typing in your ZIP code into the box below now.

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