Phillips: Car insurance claims can deal blow to rates

Phillips: Car insurance claims can deal blow to rates

July 24th, 2010 by Ellen Phillips in Business Ellen Phillips

After a fender-bender that wasn't even my fault, my insurance company raised my rates. Is there anything I can do? - Furious Freddy

Dear Freddy: Been there, done that, so believe me, while I understand your anger and frustration, was this claim the first or the last of a few or more? Many folks haven't a clue that insurance companies can drop them for filing claims a few years apart with little to no notification. (Actually, I didn't know this scary fact either until I researched your question.)

My first suggestion would be to call and speak with your agent. If you've been a good customer, he or she is more apt to go to bat for you. For example, do you have a decent driving record? Are all your insurance needs - home, auto and so forth - bundled into one policy with this one company? Do you pay your premiums on time? If you fall within these guidelines and also cross your fingers and eyeballs, you might get another

chance. It's important to remember, though, this may be a once-in-a-lifetime opportunity so don't blow it.

Anytime an insured makes a claim, whether vehicle, homeowners, personal items rider or so forth, this increases the chance the insurance company will increase your monthly premiums or, as previously noted, drop you altogether. A much better plan is to put aside a few hundred dollars in case of an unexpected (insurance) emergency. As little as $25 a month stored up may mean repairing that fender bender without involving the insurance company.

Another mistake many of us make is keeping our deductibles too low. Two hundred and fifty dollars is way low, and even $500 isn't always the best amount to help save on premiums. According to a State Farm official with whom I spoke, the average person makes six claims over a lifetime. Because of this low number (hopefully spread out over many years), industry analysts agree that raising a deductible to $1,000 or even as high as $2,500 if affordable not only helps us save when making premium payments, but also prevents us from making minimal claims that'll surely come back and bite us.

Editor's Note: Ellen Phillips is a retired English teacher who has written two consumer-oriented books. Her Consumer Watch column appears on Saturdays in the Business section of the paper. An expanded version is at under Local Business. E-mail her at