In my line of business, I get this question all of the time. So much so, that I decided to write this article to help answer some of the questions about this apparent enigma.
First of all, there is no magic formula for determining if, when, and how much your insurance rate will increase following an accident. In fact, some companies are offering a “free pass” for certain types of insurance claims.
The bottom line on this subject is this: If you report a claim to any insurance company, it is likely to show up on your official track record or claims history.
Most insurance companies report claims information to ISO (Insurance Services Office). If a claim has been reported to this massive database, then you can be sure that your insurer will have access to the information it contains.
Okay, now to answer the article title question.
Insurance rates are adjusted based upon an actuarial formula. Normally, the title of a person that evaluates risk and determines appropriate rates is called an actuarial risk analyst. This person researches so many factors it is not even funny. After the actuary has pinned down the factors on which the company will evaluate risk (ie, accident history, age, location, vehicle type, employment status, credit history, family size, number of drivers, etc), then the actuary will create a formula that reflects the appropriate charge for each “class” of insured party. The formula is normally incorporated into an underwriting system. If any of your factors change, then it will be updated in the underwriting system and could possibly affect your rate. Many times, the formula allows for certain types of claims to be excluded, and underwriting policies can also affect how the actual rate is charged.
The only way an accident victim can determine if, when and how much their rate will change is to actually contact their insurance company’s underwriting supervisor and directly inquire. Most insurance companies categorize claim types by a point system, and then they base premium charges on the amount of points a person may have.
For example, at-fault claims that cost more than $1500.00 may be assigned two points, and the insurance company may assign a rate increase for every two points. So if you have one accident that is your fault and you caused over $1500.00 in damages, then you will move up on the “risky meter” one notch.
Contact your insurance company directly and ask for the underwriting supervisor, that person should be able to tell you what to expect on your insurance bill following an accident.