Insurance companies can raise rates for almost any reason. But this doesn’t necessarily mean that you should not file a claim after a traffic accident.
Do Insurance Companies Have Free Rein When It Comes to the Rates They Charge?
In Texas, car insurance companies can increase rates pretty much anytime they want to. In fact, it is legal for car insurance companies to raise rates just for asking about a claim—even if you never file one. There are actual reports of car owners who have had their rates increased even when they never filed a claim of any kind—all they did was call and discuss the situation with their insurance company. In 2013, the Texas legislature passed a bill that prevented an insurance company from increasing rates against homeowners just for calling about a potential claim. The bill originally had similar protections for car owners, but under intense pressure from the insurance lobby, this language was taken out.
Other times, the insurance company will place some of the blame on you even when the police determined that the other guy was at fault. This is another reason they increase rates.
So If They Are Going to Raise My Rates, Why Would I Ever Have My Own Insurance Company Pay for Anything?
First of all, insurance companies have a way of finding out that there was an accident even if you do not file a claim, and they may increase your rates no matter what you do. In these cases, you might as well file a claim and get your money.
Moreover, the numbers usually work in your favor. For example, say that your rates increase from $600 per year to $725 per year because of an accident that was not your fault. That would be $625 over the next 5 years. (Rates usually go back down after 3-5 years.) If your claim is worth $2,500, it is a no-brainer to take the money and pay the increased premium.
Finally, you are allowed to change insurance companies any time you want. If the accident is not your fault, you should not have a difficult time getting a fair quote from another insurance company. Just because your insurance company increases your rates does not mean that all insurance companies will do the same. So if your company increases your rates, just shop around and get a better rate with someone else.
I have heard some clients say that they do not want their insurance involved no matter what. Sometimes, that works out OK, but many times, it costs them thousands of dollars.
Of course, if you have questions and want to talk through the issues, you are welcome to call me.