Future Policy Premiums after Claim

by Dave
(Florida)

Hi, I live in Florida (a no-fault state last time I checked...does that still matter?) and was involved in a minor accident that caused only superficial damage (trade paint etc). A police report was filed, and I was the at-fault driver (Again, what exactly does no-fault mean?) The car I hit was a top-end model & the first estimate that came back from their shop was $200 for repairs. The driver came back to me and said "Pay me the 200 or I will put in a claim"

I know this is the oldest question in the books...but what impact will such a nominally small claim amount have on my policy premium? I have a squeaky clean driving record and an improving credit rating (relative to my last renewal). The way I see it, if the present value of my higher premium resulting from this claim exceeds $201 I'd be better off keeping this under the table. However, I simply cannot afford this unbudgeted expense right now, and after all, that's why we have insurance!

I can understand the claim-to-higher-premiums pass-thru phenomenon if the nominal amount of the claim was significant, or if this claim was part of a series of accidents (demonstrating noticeably higher levels of future risk), but I'd like to think my insurance company can handle this small claim without significant premium increases against me; but I don't want to shoot myself in the foot financially. Any advice you can give on the nature of claim-to-premium pass-thru would be greatly appreciated. Thanks in advance!!

Dave


Answer

Let me try to outline the process and let you make a decision. Florida is a no fault state, which means that you cannot be held liable (suit) for damages or injuries that you cause to someone else. In a perfect world, the person you hit would have to pay for their $200 worth of damage.

There are however some restrictions on this. Purely property damage claims are excluded, you know, the claim of a vehicle hitting an unoccupied vehicle.

The other restriction is that you do have to pay, but you only pay the other person's deductible. So if this person's deductible is less than $200, you would only have to pay that amount. Consequently, if their deductible is higher, then you still have to pay $200.

In your situation you have a $200 claim. Chances are that his deductible is higher than that, so in either situation you would have to pay for his damage (you or your insurance company).

Now, the question is how will this affect your premium? Well, we have written articles on the subject, visit: http://www.auto-insurance-claim-advice.com/when-not-to-file-an-auto-insurance.html

your situation however is just a "little different" because you live in Florida.

Insurance policies are to protect you, and that is why you pay every month. It is unfair that when you use them, they jack up the price.

In lower amount claims where there is absolutely no way someone is injured, it is a good idea to pay out of pocket. No one knows if the insurance company will raise your payment, buy they only have to raise it $13 per month to make it worth it for you to pay out of pocket.

Insurance companies usually look at risk, as you pointed out. They look to see if the risk is substantially higher for your policy. I don't think this is your case. However, Florida insurance regulations and insurance companies have a very different way of doing things. It is possible that they raise your premium.

The best thing to do is to talk it over with your agent. Some agents will be able to tell you if you should pay out of pocket.

Good Luck,