Motorists have every right to make a claim for a loss that is covered in their policies. And auto insurance companies will reflect on those claims and make premium adjustments at next renewal. In some cases, it may be more than just a premium adjustment. They can actually refuse to renew the policy instead.
Although most states regulate under which circumstances companies can refuse renewal, these are not strict enough in many cases to stop companies from this practice. Furthermore, state insurance authorities can see it as one company in a large market where policyholder have plenty more options. So, car insurance non-renewal for too many claims is a permissible action in many states.
Another alternative is that they raise the premium a lot so as to force the policyholder to leave. Generally auto insurers may be lenient after one claim in many years. That is why many of them offer accident forgiveness coverage. You will have to pay additional premium in most cases and you may need to have 3 – 5 years no claim history to qualify for accident forgiveness.
When you have another claim in a short space of time they would not be looking at it lightly any more. Two or three claims may be seen as the indication of a trend that worries companies. They cannot ignore the increased possibility of a large claim and they try to get out of the way before that happens.
Many people may have the idea that small claims don’t really matter. This is a misconception as they do matter and every claim counts. For example, if you failed to stop in time to avoid the accident you may be considered lucky that the damages are negligible this time. God knows what happens next time is the attitude a vehicle insurance underwriter takes.
Even if they are all small claims three of them can be enough for non-renewal. Small claims are good indications of driver risk taking attitude. What is really a difference between a small and large claim? If you think about it, both says the same thing that something was not right. One ended up being a lucky escape when the big one was not so lucky.
Some automobile insurance carriers take too many recovery service calls into account as well, not just physical loss and liability claims. If you bought recovery service coverage too from your insurer and made too many claims on that, plus one accident it is an indication enough that you are doing a few things wrong. For example, you are not looking after your automobile well that it is becoming a real hazard.
Perhaps you need to think twice before you make a small claim especially if you can contain it. For example, you hit the corner of your automobile when you are coming out of your garage. Nobody else is involved and you can get a few estimates to get it repaired. Then, you can consider making a claim or not taking deductible into account.
This would keep the claim count low. If you have another large accident in the later months you can claim for that and hope that one claim will not be looked at harshly when the time comes to calculate renewal premiums.