How a Claim Impacts your Car Insurance Rates

Once you have filed a claim, it is quite common to see your car insurance premiums increase. This is because you have now become a liability for your car insurance company. This means that they will have to compensate the loss whenever your car gets involved in an accident. Hence, your car insurance premium is raised in order to ensure that it is able to meet all the expenses involved and still leave some profit for the company.

It is quite difficult to say how much your car insurance will be affected since this is largely dependent upon the number of claims you have made. In case of an accident, your premium will increase. However, if you have a history of accidents, then you are considered as a risky driver by the company and you may have to pay very high premium. In fact your car insurance itself may get affected by the frequency of accidents. Take for instance, if you have car accidents one after the other without much gap in between the two, your premium can be expected to increase quite substantially. It does not matter where you look for car insurance the reality is the premiums are determined by your driving history.

Car Insurance companies charge the highest insurance rates for young drivers. This is because the insurance companies consider young drivers to be a riskier segment. According to a few research reports, young men are more involved in frequent accidents. Most insurance companies consider this segment to be a burden. If young drivers belonging to this segment are involved in an accident, their car insurance premium will go up quite substantially and it will remain quite high until they are able to maintain a good driving record for a few years.

There are a few instances where there is not much affect on your premium rates. This is especially true if you have a very clean driving record. However, there are still a few companies that will increase your premium even if the accident is not due to your fault.

If you want to know how car insurance premiums are designed, it is important for you to have some working knowledge of ISO symbols. ISO stands for Insurance Services office that allocates a specific number or symbol to every car. It is this number or symbol that tells you what is the value of the car. In fact this ensures that the premium rates remain more or less similar across the industry. For instance if you have an expensive car, the ISO will also be quite high. What this indicates is that in case of an accident, it will cost more to repair the damages to your car. Hence the premium rates are also on the higher side. After an accident, the car insurance premium will shoot up further irrespective of your ISO ratings.

No car insurance company will ever withdraw providing insurance cover after an accident but the car insurance premiums may be so high that you may feel that it is better to cancel the policy than retain it. Finally, avoid filing for small and petty accidents; otherwise it will raise your car insurance premiums substantially.

About the Author:

Gabriel Montoya is the author of this article on Car Insurance . Find more information on Cheap Car Insurance here.