Behind the Numbers: How Auto Claims Impact Auto Insurance Premiums

brad-r-xt9nZR_enkw-unsplashAuto insurance is a financial safeguard that provides peace of mind on the road. It’s a shared agreement where policyholders pay premiums in exchange for protection against potential accidents and damages. One key aspect that influences your auto insurance premiums is your claims history. In this blog post, we’ll delve into how auto claims impact auto insurance premiums and what you can do to manage their effects.

  1. The Basics of Auto Insurance Premiums

Before we explore the role of auto claims, it’s essential to understand how auto insurance premiums are determined. Insurance companies use several factors to calculate premiums, including your driving history, age, location, type of vehicle, and coverage limits. Among these factors, your claims history plays a significant role.

  1. How Claims Affect Premiums

When you make an auto insurance claim, you’re essentially asking your insurer to cover the costs of damages or injuries resulting from an accident. Once your claim is processed and paid out, your insurer perceives you as a higher-risk policyholder. As a result, you may see an increase in your auto insurance premiums.

  1. Types of Claims That Impact Premiums

Not all claims are created equal. Insurance companies typically differentiate between two main types of claims: at-fault and not-at-fault claims.

  • At-Fault Claims: These are claims where you are deemed responsible for the accident. If you’re at fault, your premiums are more likely to increase significantly because insurers view you as a higher risk. The state of Texas allows an insurance company to apply a surcharge for three years following an accident.
  • Not-At-Fault Claims: In cases where the other driver is at fault, your premiums may not increase as dramatically, if at all. However, repeated not-at-fault claims can still impact your premiums over time. Many of the insurance carriers have rating systems with up to a hundred plus variables. A not-at-fault accident will impact your tiering in these systems. This is different from the surcharge added for a not at fault accident.
  1. Frequency and Severity: Two moving violations or accidents will keep most people from being able to change insurance carriers. 

Insurance companies also consider the frequency and severity of your claims. Frequent claims, even if they are not your fault, can signal a higher risk profile, which may lead to increased premiums. Additionally, claims involving serious injuries or extensive property damage can have a more significant impact on your premiums.

  1. Mitigating the Impact

To manage the impact of auto claims on your premiums, consider the following strategies:

  • Safe Driving: The most effective way to keep premiums in check is to maintain a clean driving record. Avoid accidents by practicing safe driving habits and adhering to traffic laws.
  • Bundle Policies: Many insurers offer discounts for bundling auto and home insurance policies. This can help offset premium increases.
  • Raise Deductibles: Increasing your deductible can reduce your premiums. Just be sure you can afford the higher deductible in case of an accident.
  • Shop Around: Don’t be afraid to shop for better rates. Different insurers have varying policies on how claims affect premiums, so you might find a more favorable option. Make sure you stay with a standard carrier and don’t fall for the substandard carrier trick.
  • Consider Usage-Based Insurance: Most standard carriers offer usage-based insurance, which monitors your driving habits and can lead to lower premiums for safe driving. This is commonly known as Telemetrics. Each carrier has its own proprietary name.


Auto insurance premiums are influenced by a range of factors, with claims history being a critical component. While claims can lead to increased premiums, being proactive about safe driving, considering policy adjustments, and shopping around for the best rates can help you manage the impact on your wallet. Remember that maintaining a clean driving record and driving safely not only keeps your premiums lower but also keeps you and others safe on the road.

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