How Many Claims Are Allowed in Car Insurance?
Technically, there is no limit to the number of times that you can utilize your car insurance — unless your specific insurance policy has a limit, though this is quite rare.
That said, if you make more than two claims in a 2-year period, your policy may notify you that you could be dropped. Some insurers may also increase your premium or drop you after three claims, even if you were not at fault for any of them.
Technically, insurers can drop you for any reason as long as they give you a heads-up. Therefore, different insurers could drop you at different times, depending on their policy.
What Counts as “Multiple Claims”
It does not matter when exactly you make the claims. All claims made within 3 years count as “multiple claims” on your history and could technically get you in trouble. No company likes it when multiple claims are made within a short period.
Each time you make a claim, you must pay your deductible. This includes situations where you may have to repair damage for two different incidents. For instance, if you hit a curb and then hit a deer a few days later, the damage from both events may be fixed at the same time. However, since the damage was caused by two events, you’ll have to pay two deductibles.
This can be the situation even if you have comprehensive coverage. While this coverage does cover things that liability does not, like hitting deer and curbs, these things are still counted as separate events, and therefore, you must pay the deductible twice.
That said, there are certain events where this is an exception. For instance, if your car is in a storm, it may be damaged by different things. It may receive hail damage and then get hit by a falling tree. These things may be counted as one event because they occurred during the same storm, even though they were technically caused by two different things.
Guidelines for Filing Claims
Since different claims may be covered differently by your insurance, understanding the distinction between claims is essential. Some claims may put you more at risk of not being able to renew your policy.
- No-fault claims: Usually, accidents that are caused by someone else are handled by the at-fault person’s policy. Therefore, you may not have to worry about your insurance even considering these claims as your claims at all. In some states, they may not even see them (unless the other party tries to deny responsibility). That said, some carriers may still not like having three or more of these claims made within a few years.
- At-fault claims: These claims occur when you are the at-fault party and are covered by your insurance. If you make too many of these, your carrier may decide not to renew your policy.
- Comprehensive claims: If you have a comprehensive policy, you will be able to make comprehensive claims if your vehicle gets damaged outside of an accident. However, your insurer may decide to prevent you from renewing if you make more than three claims within a 3-year period. However, comprehensive claims are sometimes not counted as actual “claims” at all. It depends on the individual policy. Your policy premium may or may not increase because of comprehensive claims.
How Do You Avoid Multiple Claims?
In theory, avoiding multiple claims is simple: Don’t have any accidents. Of course, that is easier said than done. Fortunately, there are a few different things that you can do to avoid making multiple claims, which should, in turn, make renewing your policy easier.
- Drive carefully. At-fault claims are the worst claims that you can file. Therefore, you want to avoid these as much as possible. Drive with caution, and make sure that your tires are regularly replaced to avoid causing accidents, as well as performing other forms of car maintenance. The little things can go a long way.
- Pay for claims yourself. The point of car insurance is so you don’t have to pay for the rates out of pocket. However, if you pay for your claims yourself, your insurance company may not count them as claims at all, which can be extremely helpful if you are about to lose your policy. If the cost of repairing your car is small, you may want to simply pay for it yourself. It may be cheaper than getting kicked off your policy and having to pay for a bigger bill later (or being unable to get liability insurance to begin with).
That said, one claim may raise your rate, especially if it was an at-fault accident. At the end of your term, the company may decide not to renew your policy, which can create problems later.
What Does It Mean If My Policy Is Cancelled?
Cancellation and non-renewal are not the same things. Typically, insurers can cancel your policy within the first 60 days and typically not because of claims. Cancellation usually occurs if policyholders lied on their applications and the company then figured it out.
Non-compliance is also a common reason. This occurs whenever you did not send in more requested information or failed to pay your premium.
Companies need a reason to cancel your policy.
Filing a claim (or multiple claims) will usually not cause the company to cancel your policy unless the claims are fraudulent or invalid. Fraud is absolutely a reason for companies to cancel a policy.
Another important distinction between cancellation and non-renewal is that cancellation occurs right away; non-renewal occurs at the end of your term when you attempt to renew your policy. You are often told about non-renewal ahead of time, and this is not always true for cancellation.
What Does It Mean If My Policy Is Not Renewed?
Usually, non-renewal occurs when there is something about your driving record that makes the risk too great for the insurance company. This usually occurs because of too many claims, especially if your driving record was decent in the past. However, this may also occur if you fail to pay your premium for the new term. Without a premium payment, the plan will often fail to renew.
That said, you can be dropped for practically any reason, except for issues that may count as discrimination. If your plan is not renewed because of your age, race, gender, marital status, occupation, or physical handicap, then it is an illegal cancellation.
What Are Common Causes of Non-renewal?
There are many reasons that a company can refuse to renew a driver’s policy. Typically, safe drivers are easily able to renew their policies. Companies want good drivers on their plans and paying premiums — that’s how they make money.
Therefore, if you have recently had bad car luck but are typically a good driver, you usually don’t have to worry about your company canceling your policy. Insurers tend to cancel the policies of drivers who have demonstrated that they are poor drivers.
- Too many accidents: If you have been involved in three or more accidents within 3 years, your company may decide to drop your policy. This is more likely to occur if you were the cause of the accidents, as opposed to being simply unlucky.
- Too many claims: Those with too many claims are more likely to end up being dropped by their company. However, it depends significantly on the policies of the company. Some don’t count comprehensive claims as actual claims, for instance, while others only count at-fault claims.
- Bad driving record: Insurers may decide to drop you if your driving record is poor. Usually, they check your record when they first accept you onto a plan. If they later discover new information or your driving record tanks, they may drop you. It depends on whether the company considers you to be too big of a risk.
- Late payments: Not paying your premium on time will lead to non-renewal. Often, this occurs automatically.
- Fraud: Fraud is one of the most common reasons that companies cancel plans. If you lie on your application or about a claim, the company will likely decide to drop you.
- DUI: Drivers who get a DUI are typically given a non-renewal.
That said, it is hard to predict which occurrences count toward a non-renewal. It depends on the exact policy that the company follows. Some have automatic non-renewals for DUIs, for instance, while others may not.
The company will typically look at many factors. However, some companies will automatically not renew for certain reasons, so no one may actually look at your case before your policy is not renewed. Some states have specific rules against non-renewals for certain reasons, while others do not.
Generally, the fewer claims you have, the better. However, what exactly counts as a “claim” varies widely. Some companies do not count non-fault claims toward this total, for instance.
There is not a specific number of claims that you can file before you are dropped by your car insurance. Rarely is a number provided in a policy, though there are exceptions to this rule. Three claims within 3 years tend to be the number that will make insurance companies give a policy a second look.
However, different companies have different policies. Some may not count certain claims toward your total claims. For example, some companies don’t count comprehensive claims or count them separately. Others may not count no-fault claims because you weren’t the cause of the incident.
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