Premium Increases After Car Damage

Higher Premiums Due to Car Damage Claims

Did you cause an accident that was your fault? If so, there’s a good chance your premium will go up. Filing a claim on your comprehensive insurance will cost you your no-claims years, unless the damages are recovered from another party.

Your premium will increase after a claim because the insurer considers you a higher risk. If you’re at fault for an accident, you’ll move down the no-claims ladder, lose your no-claims years, and receive a smaller no-claims discount. As a result, your premium will increase. Only in the case of limited comprehensive coverage claims—such as theft or window damage—will your premium usually remain the same.

The premium increase usually does not take effect immediately after the claim is settled, but rather on the next policy renewal date.

A claim that doesn't affect your premium or your no-claims years

Is someone else liable for your damages, and will those damages be covered by his or her insurance? If so, you’ll retain your no-claims years.

There are also certain types of damage caused by external factors that do not affect your no-claims years.

These claims will not affect your no-claims record and will not result in a higher premium. Your no-claims discount tier will remain the same, and you will retain the discount you have earned.

A claim that affects your premium and your claim-free years

If you have damage that you cannot recover from someone else, you must report the damage to your own auto insurance company. "Non-recoverable damage" means that the other party is not liable or is unknown.

A claim that can only be filed under the liability and comprehensive (all-risk) coverage may result in you losing your no-claims bonus.

You can file a claim for car damage caused by vandalism under your liability and comprehensive (all-risk) auto insurance, but it will affect your no-claims years.

Damage caused by oneself

With Third-Party Liability + Limited Comprehensive Coverage, damage you cause yourself can affect your no-claims years and premium. With Third-Party Liability + Comprehensive (All-Risk) coverage, you’re also insured for damage you cause yourself, such as in a collision or from parking damage.

If you file a claim for this damage, it will be considered at-fault damage. As a result, you’ll move down on the no-claims discount scale, often lose 5 claim-free years, and your premium will go up when you renew your policy or switch insurers.

No-Claim Protection: Prevent Premium Increases

There is a supplementary insurance policy designed to prevent your premium from increasing after a claim. With a no-claims protection policy, your premium stays the same, even if you file one claim each year. However, car insurance with no-claims protection is more expensive.

You do lose a certain number of claim-free years for each claim you file, even if you have car insurance with no-claim protection.

Your premium increase will take effect as of this date

A premium increase does not take effect immediately after a claim is settled. It depends on the start date of your auto insurance policy. If your auto insurance policy begins on August 1, you will receive your new policy and a new green card around that date each year.

Your auto insurance provider also determines on that date each year whether or not you’ll receive an additional claim-free year. Suppose you’re at fault in an accident on September 1 of that same year; in that case, the premium increase won’t take effect until August 1 of the following year.

Claim Just Before the Start of the New Insurance Year

If you’re in an accident that isn’t your fault a few days before the start of the new insurance year, the insurer will handle the claim. This may take some time.

Because you have filed a claim that has not yet been settled, the insurer may choose to reduce your no-claims discount, which will result in higher premiums. The investigation may reveal that your auto insurer is required to pay you for the damage after all.

To prevent you from having to pay additional premiums, the insurer is increasing your premium as a precaution.

If it turns out later that you paid too much in premiums, you will be refunded the amount you overpaid for the entire period.

If you have negative claim-free years, your premium will go up

If you file a claim with your auto insurance company, you’ll lose your no-claims years. Drivers with few or no no-claims years may end up with negative no-claims years after just one claim. This is also known as a “malus.” With a malus on your record, you’ll no longer receive a discount on your premium; instead, you’ll have to pay extra.

A claim will cost you your claim-free years. If you’re just starting out or have almost no claims, even a single claim can result in a negative number of claim-free years—this is also known as a “malus.” If you have a malus on record, you will no longer receive a discount on your premium. In fact, your premium will actually increase.