Some Car Insurance Claims Won’t Hurt Your Rates

Crazy StormThere is always a certain Catch-22 element to car insurance coverage. You are legally required to have it, it’s the responsible thing to do, and while you typically may work hard to ensure you’re getting the most coverage at the best rate, what happens when you actually have to rely on it?

The general wisdom often dispensed by self-described insurance experts is that any claim you file will cause you car insurance rates to increase next time you renew a policy or go to switch insurers and get a new policy.

Fortunately, not all car insurance claims are treated equally. Knowing what claims won’t impact your future rates, and being aware of how claims are tracked and calculated in any future risk assessment concerning you as a driver, can be valuable when the time comes when you need to consider filing a claim. I may also help to explain the results when you go to compare car insurance rates.

Getting a CLUE on claims

Before outlining some broad categories on how claims may or may not impact your future car insurance rates, it’s important to know how insurance companies know if and when you filed claims in the past. Your current insurer will have a pretty good record of your experience with them, but what if you decide to change carriers? How would a prospective new carrier know about your past claims experience with other insurers?

Car insurance companies use a tool known as the Comprehensive Loss Underwriting Exchange, or CLUE report to glean information regarding your claims experience. CLUE is a report provided by LexisNexis Risk Solutions to find out what claims have been filed in your name in the past seven years. When you apply for any auto insurance policy (especially with a new company) the insurer will generally check your CLUE report to see what other insurance companies have reported about your car insurance claims experience.

Keeping track of your CLUE

You have a right to see what’s on your CLUE report, and ordering it is easy. (You may also be interested in any CLUE reports that also show your home or renters insurance claims history.) You can visit the LexisNexis site on personal reports (, fill out a request form, create a membership profile and in a matter of seconds your report will be available for you to view and/or print. It generally takes less than five minutes from the first keystroke to delivery of your free report.

When you do get your CLUE report, review it carefully. Just as with your credit report, you can petition to have items on your CLUE report corrected, amended or even further explained if they are not accurately reflecting what happened with a particular claim.

Bad claims/good claims: it’s a matter of fault

Trying to determine which car insurance claims will hurt your risk assessment and ratings down the road may not always be an exact science, but you can generalize between two categories: accidents that are your fault and those that aren’t.

Insurers will typically view your claims experience unfavorably when you are the person at fault for the accident or incident that generated the need for a claim. Claims that aren’t your fault or that stem from major natural disasters or Acts of God won’t typically count against you in future rate comparisons.

This broad distinction can get fuzzy if you live and drive in one of the handful of no fault states for car insurance, or if you live in a state that assigns provisional or representational fault in car accidents. In these cases, insurers will often “grade” your claims experience based on the policy option tapped to pay the claim. For example, claims filed on the liability portion of your car insurance coverage typically will have the biggest impact on your future ratings.

According to both the Insurance Research Council (IRC) and the Insurance Information Institute, your future car insurance rates can go up by as much as 40-50 percent after an at fault accident where a claim is made against your coverage. If an at fault accident is accompanied by serious criminal charges (i.e. felony charges, DUI charges) you can expect serious rate increases down the road and possible cancellation or non-renewal of any current policies.

There are a growing number of companies that offer an accident forgiveness option with car insurance coverage. These plans usually require a driver to go for a set period of time (1-5 years) without any claims and then when a first claim is filed, the insurer promises not to count it against the next year’s renewal rates for coverage. Remember, however, that these provisions are often voided if serious charges accompany an incident generating a claim. You should also remember that even if your renewal rate doesn’t immediately go up with a “forgiven” accident, that claim will stay on your CLUE report for up to seven years.

Do you have to claim everything?

Before you consider whether or not to file a claim for an accident or incident, take a few moments to consider a few things. First of all, read your car insurance policy carefully to be sure that any failure to file or report certain incidents doesn’t void your policy in any way. Also know that, as a general rule, state laws will require you to report any incident that involves another party and you may also be further required to file a police report when other parties are involved.

One area of possible claims you may want to seriously weigh your options on are those where a deductible is involved and the possible repair costs are less than that deductible.

Let’s say you back into your own mailbox or a utility pole and smash your taillights. Let’s further say you have collision coverage with a $1,000 deductible. In theory, you could file a claim on your collision coverage to have the taillight replaced, but what if it only costs $800 to replace the taillight? Yes, you would have to pay that $800 out-of-pocket first and yes, that $800 would go towards satisfying a good portion of your deductible. Ask yourself: Would filing a claim for something you will have to pay out-of-pocket for be worth it in the long run?

Understanding and managing any car insurance claims you may feel compelled (or be required) to file is something that you can do with just a small amount of effort. Taking the time to get your claims history reports and review them may be well worth it in the long run when you go to renew, compare or change your car insurance coverage.

Jeffrey Davidson is a writer and former consultant with more than 25 years of experience working with insurance and investment companies. He currently writes about auto insurance products and issues for Reply!. You can find his article on ways you can review and understand car insurance coverage plans.