Can Small Claims Cause Car Insurance Non-Renewal?

Claims will always be the key criteria for underwriters while either pricing a policy or deciding to drop a policyholder from their books. If an auto insurance company doesn’t want to renew a policy because of 3 little claims in the last two years, can you argue that they are too small payouts to cause non-renewal? Yes, but you may argue to no avail.

There are generally rules in most states to determine under which circumstances insurers can refuse car insurance renewal. Sometimes, auto insurance companies can argue that it is not the size but the frequency of accidents that get them worried. As long as they can make a good argument, they would be allowed to deny policy renewal.

Having three small claims in two years can only be taken as a sign that something big is on the way. From this viewpoint, it is not hard why they are trying to offload you before you could place a bigger claim.

By the way, most state insurance commissioners wouldn’t feel to put up a fight for this kind of decisions. There are plenty other companies you can get insured with that it doesn’t necessarily cause a serious concern. Plus vehicle insurance carriers should have a room to operate the way they like as it is their money at risk. Too much bureaucracy in the market usually increases the costs for customers and prevent it from working efficiently.

It is no secret that companies can be keener to off load their high risk policyholders and they can kick them out pretty quickly. Traffic tickets are other consideration as well. They will be checking your DMV records and acting on it either by premium increase or refusal to renew.

So, it could be combination of traffic violation tickets and claims that can push the policy over the edge into non-renewal zone. You need to mind that your risk level is not going to be a concern for auto insurers. Otherwise, you will be facing high premium charges until enough time passes to clear them, providing you are not getting any more tickets or making claims.

The only way insurers can offer great rates for good drivers is if they can charge higher rates for risky ones. This is the solution most carriers are inclined to. Some underwriters may take it a step further and start dropping policyholders who are likely to make claims in the near future. This is simply a business decision from their point of view. They have overheads and claims to pay as well as making sure that enough money will be left to pay dividends to their shareholders. Just like any other business.

You need to look into replacing the policy through other carriers as soon as you know your auto insurer dropped you. Usually, they will give you enough notice to find alternative coverage. Clearly, it would be harder to find cheap policies but you need to try harder now. See if there are other discounts you can qualify to reduce the effects of recent claims on your premium. For example, having a good credit score, owning your home or paying the premium in full are some of the ways to lower auto insurance after accidents and claims. Shopping for the most competitive rates is another way.

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