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What Happens to Your Car Insurance Policy If You File Too Many Claims?

By Reata Insurance Group Car Insurance Comments Off on What Happens to Your Car Insurance Policy If You File Too Many Claims?

Car Insurance Policy

Regularly filing claims for your car is something that no one enjoys. It can cause a strained relationship between you and your insurance company. This article explores a potential breaking point and what happens if your car insurance company decides enough is enough.

Be it because of bad weather or an unfortunate accident, regardless of how you ended up with a damaged car, you may find yourself in a situation where you have to file several claims within a few months. Having a clear understanding of the claims process will help you figure out how to proceed.

Filing Multiple Claims and Deductibles 

Any claims made during a three-year period are considered multiple claims. If you file two claims within a two or three-month time period, pay attention to your deductible. You may seek to save time and energy by having both incidents taken care of together. However, as each claim has been filed for a separate incident, you’ll have to pay multiple deductibles. If you have been impacted by severe weather, some policies make exceptions that will make you responsible for one deductible  if a single storm caused all of the damage, you would only be responsible for one deductible.

What to Expect after Filing Different Types of Claims

The following are the 3 categories of claims that can be filed and the effects of filing them:

1.At-Fault Claims

Before you file a claim, think about who is at fault for the accident and the amount of damage. If you’re responsible for an accident, that means you will be considered at fault. With auto insurance, two at-fault claims within three years may lead to your insurance company deciding not to renew your coverage.

2.Comprehensive Claims 

Normally, multiple comprehensive claims do not impact your insurance rates unless you have filed more than two claims in a three-year period. However, make sure to read over your policy. Most insurance companies do not charge for all comprehensive claims.

3.General Claims Including $0 Paid Claims

The process of handling general claims varies from state to state. In several states, including Texas, $0 paid claims can negatively affect your records as much as a paid claim. A claim is known as a $0 paid claim when you report an accident to your insurance company, file a claim but nothing is paid or you cancel it. Your insurer will report it on your driving history, showing the amount paid out as $0.00.

Common Reasons Why Your Car Insurance Policy May Not Be Renewed

1.Poor Driving Record

Many people have their auto insurance policies dropped due to a poor driving record. If you are held liable for multiple traffic violations in a short amount of time, your insurer may decide to not renew your policy.

2.DUI

Drivers who are convicted of driving under the influence are automatically at risk of nonrenewal.

3.Delinquent Payments 

If you fail to make your payments or file fraudulent claims, a carrier can non-renew your policy.

4.Filing Too Many Claims

Remember that insurance companies need to make money. If they have to pay out more money to you than they receive from your premiums, that is not good business, and they may decide it’s in their best interests to cancel your policy or increase your premiums.

How to Avoid Penalties 

1.Stay Focused 

When you are driving, always pay attention to the road. Drive cautiously, especially when under extreme weather conditions, and perform regular maintenance on your vehicle.

2.Pay out of Pocket 

Sometimes the most efficient option is to handle damages by paying for it yourself. Evaluate the risks associated with paying for a claim yourself compared to letting the insurance company handle it.

Cancellation or Non-Renewal of Car Insurance

It’s important to understand the difference between canceling a policy and not renewing it. Canceling a policy means that the insurance company decided to terminate your policy before its expiration date. This generally happens in the first couple of months. Common reasons for cancellation include not paying your premium and false information on your application. Non-renewal of policy means that your insurer simply chose not to extend your coverage, which can be for any of the reasons listed above or due to internal changes within the company.

There are multiple scenarios in which filing too many claims can lead to your coverage being dropped. It’s important to pay your premiums on time and only make claims when it’s absolutely necessary. If you have questions about your car insurance coverage, the experts here at Reata Insurance Group will assist you. Get in touch with us today!

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