Will My Insurance Premium Go Up If I File a UM/UIM Claim in Texas?
November 30, 2023
Car accidents are an unfortunate reality on our roads, impacting millions each year. In the United States, it is estimated that there are about 6.3 million car accidents annually, resulting in over 3 million injuries and approximately 40,000 fatalities.
In the early months of 2023, the National Highway Traffic Safety Administration (NHTSA) reported that 9,330 people died in traffic crashes, a slight decrease of 3.3% compared to the previous year’s fatalities during the same period. By the first half of 2023, around 19,515 fatalities were recorded, marking a continuing trend of decline in fatalities.
Despite a slight increase in miles traveled in 2023, the National Safety Council (NSC) noted a decrease in the death rate per 100 million vehicle miles traveled, indicating a positive shift towards safer driving.
This article aims to address a crucial question many car accident victims face: “Will filing a car accident claim under my uninsured/underinsured motorist (UM/UIM) coverage raise my insurance premiums?”
Understanding this aspect of insurance can be vital for those involved in a car accident. We’ll explore what uninsured/underinsured motorist coverage entails, how claims may affect your premiums, and when it might be wise to consult with a car accident lawyer.
What is Uninsured/Underinsured Motorist Coverage?
Uninsured and underinsured motorist coverage is an often overlooked but crucial part of auto insurance policies. This coverage steps in when you’re involved in an accident with a driver who either lacks insurance or doesn’t have enough insurance to cover the damages and injuries sustained.
Uninsured Motorist Coverage (UM) kicks in when the at-fault driver has no insurance. It covers bodily injuries to you and your passengers, and in some policies, it may cover property damage. For instance, imagine you’re hit by a driver who runs a red light, and it turns out they don’t have auto insurance. Your uninsured motorist coverage would cover the medical bills and car repair costs up to your policy’s limits.
Underinsured Motorist Coverage (UIM), on the other hand, is useful when the at-fault driver’s insurance isn’t enough to cover all the damages. Let’s say the other driver’s policy only covers up to $20,000, but your medical expenses amount to $30,000. If you have UIM coverage, it can help pay the $10,000 gap.
These coverages are especially important considering the number of uninsured drivers on the road. According to the Insurance Information Institute, about 12.6% of motorists were uninsured in 2019. In a car accident involving such drivers, without UM or UIM coverage, you might end up bearing significant financial burdens.
It’s also worth noting that uninsured/underinsured motorist coverage is mandated in some states, while in others, it’s optional. The requirements and limits can vary widely, so it’s essential to understand the specifics of your state’s laws and how they apply to your insurance policy.
In the next section, we’ll delve into the impact of filing a claim under this coverage on your insurance premiums. We’ll look at how insurers calculate premiums and what factors might influence an increase or decrease in your rates following a claim.
How Claims Can Affect Your Insurance Premiums
The relationship between filing an insurance claim and the potential impact on your premiums can be complex. Understanding this connection is crucial for anyone considering a claim after a car accident, especially under uninsured/underinsured motorist coverage.
Firstly, it’s important to know how insurance premiums are calculated. Insurers consider various factors, including your driving history, location, vehicle type, and previous claims. The fundamental principle is risk assessment: the higher the risk you pose, the higher your premiums. Filing a claim can be perceived as an increase in risk, potentially leading to higher premiums.
However, not all claims result in increased premiums. For instance, if you’re not at fault in an accident, your premiums might not increase. This is particularly relevant with uninsured/underinsured motorist claims. Since these claims are typically filed when another driver is at fault but lacks adequate insurance, your insurer may not view you as higher risk.
Yet, this isn’t a universal rule. Some insurers might still increase your premiums after a UM or UIM claim, arguing that the claim indicates a higher risk of future incidents, regardless of fault. This practice varies by insurer and state regulations. In some states, insurers are prohibited from increasing premiums for not-at-fault accidents, while others allow it.
Moreover, the frequency of claims can also impact your premiums. Multiple claims within a short period might lead to higher premiums, as insurers might view this as a pattern of risk.
Lastly, the severity of the claim matters. A minor fender-bender might not affect your premiums much, but a major accident with significant claims could be a different story.
In summary, whether your premiums increase after a UM/UIM claim depends on several factors, including your insurer’s policies, state regulations, the nature of the claim, and your overall claim history. In the next section, we’ll look at a real-life case study to better understand how filing a claim can affect insurance premiums.
Case Study: Filing a Claim and Premium Changes
To better understand the impact of filing an uninsured/underinsured motorist claim on insurance premiums, let’s examine a hypothetical case study:
Scenario: Emily, a responsible driver with a clean driving record, was involved in a car accident. The other driver, who was at fault, had insufficient insurance to cover Emily’s medical expenses and vehicle repairs. Emily filed a claim under her underinsured motorist coverage.
Outcome: After the claim was processed, Emily noticed an increase in her insurance premiums at the time of her policy renewal. Confused and concerned, she contacted her insurance company for an explanation.
Analysis: Emily’s insurance company explained that while the accident wasn’t her fault, the claim filed under the UIM coverage triggered a reassessment of her risk profile. The insurer considered the geographic area where the accident occurred, which had a high rate of uninsured drivers, increasing the likelihood of similar incidents in the future. This factor, combined with the substantial amount claimed, led to an increase in her premiums.
Insurer’s Perspective: The insurer highlighted that their decision wasn’t solely based on Emily’s claim but also considered broader risk factors associated with her policy. They also noted that if Emily hadn’t had UIM coverage, she would have faced significant out-of-pocket expenses for her medical treatment and car repairs.
Emily’s Takeaway: While initially frustrated with the premium increase, Emily understood the importance of her UIM coverage in protecting her from financial hardship. She also decided to shop around for new insurance quotes, to see if she could find a better rate considering her situation.
This case study illustrates that while filing a claim under uninsured/underinsured motorist coverage can lead to premium increases, the variables involved are numerous and specific to individual circumstances. Moreover, it emphasizes the importance of such coverage and the need to periodically review and compare insurance options.
Insurance Carriers Known for Raising Premiums After UM/UIM Claims
When it comes to filing a claim under uninsured/underinsured motorist (UM/UIM) coverage, the response of insurance carriers can significantly vary. Some insurance companies are more notorious for raising premiums following such claims.
- Progressive: According to one source, Progressive has been identified as one of the most aggressive insurers in terms of increasing premiums after a no-fault accident involving an uninsured motorist claim. The average rate increase reported was a substantial 16.6%. Progressive admits that it may raise your insurance rate after a no-fault accident. According to Progressive’s website, “It may seem unfair, but accidents that aren’t your fault may still increase your rate in certain states.”
- GEICO, Farmers, and Allstate: A 2017 study by the Consumer Federation of America noted that, in general, these companies tend to raise rates after collisions, including those involving uninsured motorists. This trend, while not exclusive to these insurers, highlights a common practice in the industry.
- State Farm: In contrast, State Farm stands out for its leniency. The same nationwide study that highlighted Progressive’s rate increases found that State Farm does not typically raise premiums for uninsured motorist claims, registering a 0% increase for such incidents.
It is essential to note that these trends and practices can be subject to change and might vary based on individual circumstances and state regulations. Policyholders are advised to review their insurance policies and consult with their insurers for specific details related to UIM/UM claims and premium adjustments.
This information aims to guide individuals who might be considering filing a UIM/UM claim and are concerned about the potential financial implications regarding their insurance premiums. It’s also advisable to compare different insurance providers and their policies regarding UIM/UM claims to find the most favorable terms.
When to Consult a Car Accident Lawyer
Navigating the aftermath of a car accident, especially one involving uninsured or underinsured motorists, can be complex and overwhelming. While having UIM/UM coverage provides a layer of financial protection, there are circumstances where consulting a car accident lawyer is advisable.
1. Understanding Your Rights and Coverage:
- A lawyer can help you understand the intricacies of your insurance policy, ensuring you're fully aware of your coverage and rights.
- They can advise on the best course of action, whether it's filing a claim under your UIM/UM coverage or pursuing legal action against the at-fault party.
2. Dealing with Insurance Companies:
- Insurance companies often aim to minimize payouts. A lawyer can negotiate on your behalf to ensure you receive fair compensation.
- They can handle communications and negotiations, safeguarding you from tactics that might undervalue your claim.
3. When the Settlement Offer is Inadequate:
- If the insurance company's settlement offer doesn't cover all your damages and expenses, a lawyer can help argue for a better offer.
- They can compile evidence to support the true value of your claim, including medical expenses, lost wages, and pain and suffering.
4. Complex Legal Situations:
- In cases involving severe injuries, long-term disability, or wrongful death, legal guidance becomes even more crucial.
- A lawyer can help in navigating the complexities of such cases, ensuring that all legal avenues for compensation are explored.
5. Peace of Mind:
- Having a legal expert handle the legalities allows you to focus on recovery and healing.
- A lawyer’s expertise can provide peace of mind, knowing that your case is being handled professionally and diligently.
Conclusion: Consulting a car accident lawyer becomes vital in ensuring that your rights are protected and you receive the compensation you deserve. Their expertise can be particularly beneficial in complex cases, or when dealing with insurance companies and settlement negotiations.
In the next section, we will provide preventative measures and safe driving tips to help you avoid car accidents and potential claims.
Preventative Measures and Safe Driving Tips
While understanding insurance coverage and knowing when to consult a lawyer are crucial, the best strategy is to prevent car accidents from happening in the first place. Here are some key preventative measures and safe driving tips to help you avoid accidents and the resulting claims:
1. Stay Vigilant and Focused:
- Avoid distractions like using your phone, eating, or any other activity that takes your attention off the road.
- Always be aware of your surroundings and anticipate the actions of other drivers.
2. Adhere to Traffic Rules:
- Follow speed limits and traffic signals. Speeding and running red lights significantly increase the risk of accidents.
- Use turn signals and abide by road signage to communicate your actions to other drivers.
3. Maintain a Safe Following Distance:
- Keep a safe distance between your vehicle and the one in front of you, allowing ample time to react and stop if necessary.
- This is especially important in bad weather conditions or heavy traffic.
4. Regular Vehicle Maintenance:
- Ensure your vehicle is in good working condition. Regular maintenance checks for brakes, tires, and lights can prevent accidents.
- Address any mechanical issues as soon as they arise.
5. Avoid Driving in Adverse Weather Conditions:
- If possible, avoid driving during extreme weather conditions like heavy rain, snow, or fog.
- If you must drive, reduce your speed and increase your following distance.
6. Stay Sober and Rested:
- Never drive under the influence of alcohol, drugs, or if excessively tired. Impaired or drowsy driving greatly increases the risk of accidents.
7. Educate Yourself on Safe Driving Practices:
- Consider taking a defensive driving course to enhance your driving skills and awareness.
By implementing these safe driving practices, you can significantly reduce the risk of being involved in a car accident, thereby avoiding the complications that come with insurance claims and legal processes.
In the conclusion of this article, we will summarize the key points and provide final thoughts on navigating car accident claims and insurance considerations.