Car Insurance: Is it Worth Filing Small Claims?

Car Insurance Claims Advice -Is it Worth Filing Small Claims?

You wake up one morning and find you didn’t hear the alarm clock. You’re already late for work, so you jump out of bed, get ready, grab a sip of coffee on your way out the door and jump into your car. You quickly back out but you are in such a rush you forget the post that’s been there for the past three years and back straight into it. You sigh, wondering what else can go wrong and quickly brush the incident off because you have a car insurance policy that includes collision coverage. You can just file a claim later.

But should you? This is the all important question. You may have a nasty surprise that after you collect the money, your following premium comes with a surcharge for the next three years and you end up paying much more than you received in the claim. Yes, it is unfair, but this is the way car insurance companies recover their losses, or better said make a profit.

When you first get your car insurance policy you are grouped with other drivers with whom you will share losses. This is usually done according to age, location, car usage and driving record, which are all factors that contribute to the degree of risk you represent for the insurance company. In other words, the higher the risk you represent, the higher your premiums will be. That’s why your rates drop when you reach 25. It has nothing to do with you becoming a better driver, but with the fact that statistically speaking people have fewer accidents once they are over that age because they have more experience and are more responsible.

Car Insurance Claims Advice

However, even something as small as hitting a post can have a detrimental effect on your insurance rates and catapult you into a different category that presents a higher risk to the insurance provider. You may find it better in the long run to pay the claim yourself. Therefore you should first determine exactly what impact filing a claim will have on your insurance rates because different companies have different policies. For example, if this is your first accident in which you are at fault, some companies may not charge you anything, while other companies won’t charge as long as the claim doesn’t exceed a certain set amount which is usually under $1,000. Your best option would be to consult with your agent as he or she can help you determine whether or not there will be any extra costs associated with filing the claim.

The problem is that this little incident alone may not affect your rates, but if your spouse got a speeding ticket two months ago, you may find your rates going up by $1,500 over the next three years, making a $900 dollar claim a lot more expensive than if you just paid for the work yourself. A good agent will study you car insurance policy as well as your family driving record to make sure there are no hidden problems that can come back and bite you later on.

Car Insurance Advice - For those with a Poor Driving Record

If your family has a really bad driving record the insurance provider is likely to completely cancel your policy and force you to take out high risk car insurance which will end up costing you even double the rates you are paying now. If this is the case then you might consider completely dropping collision coverage, as you will be paying for something that you won’t be using anyway.

If, on the other hand, you are involved in a collision that is not your fault, it is often better to have you car insurance pay for the damage, especially if your vehicle is not drivable. In this case, your insurance provider will be responsible to recover the amounts spent from the other driver’s company and they usually attempt to get your deductible covered as well, saving you a lot of time and aggravation.

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