Car insurance is a contract between you and the insurance company to protect you financially should anything happen to your vehicle in the event of an accident. In exchange for your insurance premium payment, the insurer will provide coverage as outlined in your policy.
In brief, having such insurance in place will put you at ease if you participate in an accident. You can claim from your insurer in order to cover the cost of your vehicle.
Although you have the privilege to file a claim at any time, please be careful. As it may seem convenient, you may be shocked to learn that it can affect your insurance premium.
Will your insurance premium increase after an accident?
Unfortunately yes. Making a claim will almost always lead to an increase in your car insurance premium.
You are also likely to lose your accumulated No Claims Discount (NCD). However, it depends on the type of claim that you made.
Read on as we share how it affects your insurance premium.
Higher insurance premium during renewal
Your insurance premium will soar during the next renewal if you are found to be at fault for the accident.
What is an at-fault claim?
An at-fault accident is a car accident caused by a driver’s negligence. If an accident is your fault, your claim will be recorded as an at-fault claim on your insurance history.
For example:
- If your vehicle hits another car or,
- If you damage your car (run into a lamp post, hydrant, traffic pole, etc.)
However, not all claims lead to higher premiums. There are other types of claims that usually incur no penalty. For example, if it is a non-fault car insurance claim.
What is a non-fault car insurance claim?
A non-fault claim is when the fault lies completely with someone else. For example:
- If your car was stationary and another driver backed into it or,
- If your car is hit by another driver who is perhaps speeding or ignoring the rules of the road
In this case, you can file a claim to the insurer of the other party’s vehicle. The other driver’s car insurance typically pays for your expenses.
Affect No-claim Discount (NCD)
NCD is a form of discount that insurers offer if you do not make any claims throughout the coverage period. When you do not make any claim on your insurance policy, your NCD rate will increase, thereby lowering your car insurance premium.
Making an at-fault claim for an accident will almost certainly affect your NCD years. If you have had an accident, the basic cost of your premium will probably increase.
Although your NCD remains, please note that it is applied after your premium is calculated, resulting in an overall increase. Nevertheless, you can continue to enjoy your NCD even after you make any of the following claims:
- No-fault damage claim
- Windscreen claim (with additional cover)
Too many accidents history will increase insurance premium rates
Some factors that affect your auto insurance premiums include your driving record. Your car insurance premium is likely to be higher than someone with a clean driving record if you’ve been in multiple accidents. If you often violate traffic rules and run into road accidents, your insurance premium will likely be higher as your insurer will consider you a high-risk driver.
In contrast, if you are a good driver and have a squeaky-clean driving record, your car insurance premium will likely be lower.
Be careful when filing insurance claims
There are times when it is advisable to file an insurance claim. Making multiple claims may cause your insurer to raise your rates or decide not to renew your policy at the end of your term.
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