Top 100 factors that determine whether my insurance company will raise my insurance premium or cancels or non- renew my insurance if I file a car accident claim?
Ten things that effect whether a car insurance company raises your car insurance premium or cancels your insurance after a car accident
1. When can the insurance company raise your premium?
A. Insurers consider a wide variety of criteria in developing their premiums. Each of the criteria assists the insurer in predicting the likelihood that you will be in an accident or otherwise incur damages resulting in the filing of a claim. The criteria that insurers consider commonly include age, sex, marital status, number of miles driven annually, driving record, credit history, whether the insured vehicle is used for business, pleasure or both, the type of vehicle insured, and the location where the vehicle is principally garaged. These criteria are also referred to as rating or risk factors. People who have similar characteristics are placed in the same group and charged the same premium.
B. Any of the following circumstances:
I. The addition of a motor vehicle to a policy;
II. A change of motor vehicle covered by a policy;
III. A change in vehicle usage that results in a change in driver class;
IV. A change of territory;
V. A change in the age, sex, or marital status of an insured.
VI. An increase in coverage limits requested by the insured;
VII. The addition of a driver;
VIII. The removal of a multi-policy discount;
IX. Any request by an insured that results in a change in coverage, decrease in deductible, or other change to a policy;
X. The removal or reduction of a discount if the discount is not removed or reduced wholly or partly due to an accident; violation of the Maryland Vehicle Law or the vehicle law of another state; the claims history of the insured; or
C. While many insurers have defensive driver plans, also known as surcharge plans, that make policyholders who receive tickets or are involved in accidents pay an additional premium, often the surcharges may not be enough to cover the insurer’s losses. Sometimes, based upon the experience of the group, the premiums collected may not be sufficient to support the projected costs of the claims. When this occurs, an insurer may file with the Maryland Insurance Administration a plan to implement a general rate increase. The insurer is required to collect premiums in accordance with the plans if they justify their rates.
In general, the more stringent the insurer’s underwriting criteria (no losses, or one loss within three years, no tickets, etc.), the lower the premium for the policyholders as the insurer is limiting its exposure to losses.
D. Maryland law prohibits an insurance company from increasing your premium (including surcharging, reclassifying, or removing a discount) as a result of a claim or payment made under PIP coverage.
E. My insurer sent a notice increasing my premium due to my son’s accident and offered the option to exclude him. What does this mean? When an insurer proposes to increase your auto insurance policy premium, Maryland law requires the insurer to send you a notice at least 45 days in advance of the date the new premium is effective. If the premium increase is based on the driving record of one or more drivers insured under the policy, the notice must provide you with the option to exclude the driver whose record is causing the increase from the coverage of the policy. Thus, you have at least three options:
I. Accept and pay the increased premium;
II. File a protest of the increase with the MIA.
III. The third option is for the insured to decide to exclude the driver with the poor driving history from the coverage of the policy.
a. If you exclude this driver, the insurer cannot increase your premium based on the driving history of the excluded driver.
b. It is important to understand, however, that an excluded driver cannot legally operate the insured vehicle(s) unless he obtains a separate policy of auto insurance.
c. If the excluded driver should operate any vehicle covered by the insurance policy and is involved in an accident, there will be no coverage under your policy for the damage the excluded driver has caused; either to another person and their property or to your vehicle.
2. Non-renewal of an insurance policy.
A. Insurance policies are issued for a specific period of time or “term”. Insurers will issue a policy for a period of either six or 12 months. A nonrenewal occurs when an insurer decides not to renew your insurance coverage at the end of the policy’s term.
B. An insurer may non-renew your policy under the following conditions:
I. If you committed fraud or misrepresented your driving record or other material fact(s) when applying for your insurance or while making a claim.
II. If, within the past three years, you:
a. filed three or more claims where you were not responsible or “not at fault” (e.g. theft, windshield damage, or a Personal Injury Protection claim)
b. filed two or more claims for accidents that you caused or that you were considered to be “at fault”;
c. filed any combination of three or more “at-fault” accident claims or moving violations;
d. were convicted of operating a motor vehicle while under the influence of alcohol, impaired or intoxicated, or while under the influence of drugs or controlled dangerous substance or any combination of drugs and alcohol that impair your ability to operate a motor vehicle. NOTE: Depending upon the insurer’s underwriting guidelines or rating rules, a “conviction” may include a plea or nolo contendre or a probation before judgment.
e. were convicted of homicide, assault, reckless endangerment or criminal negligence arising out of the operation of your vehicle;
f. were convicted of using a motor vehicle to participate in a felony act; or
g. violated the insurer’s underwriting guidelines.
h. If, within the past two years, you have had your license or registration revoked or suspended for a reason related to the driving record of the operator; or
i. If, within the past two years, you have had three or more moving violations.
j. Can my insurer non-renew my policy because of accidents that were not my fault? Yes. An insurer may non-renew a policy if you have filed three or more “not-at-fault” claims within a three-year period of time. Comprehensive and uninsured/under-insured motorist coverages are considered “not-at-fault” coverages. Comprehensive claims include theft, vandalism or striking of an animal. Personal Injury Protection claims may be considered either “at-fault” or “not-at-fault,” depending on the facts surrounding the particular claim. Even though you may not have been at fault for these claims, there are costs for an insurer associated with these claims which is why state law allows them to be used to non-renew a policy if there are three or more within a three- year time period.
k. Your insurer may lawfully non-renew your policy if you commit fraud or misrepresent material information when applying for insurance some cases, your driving record or accident history), or if you commit fraud or misrepresent material information when filing a claim (such as, in some cases, how the accident occurred or who was driving).
l. The cancellation or nonrenewal is because it violates the insurer’s rating criteria or underwriting standards which were filed with and approved by the insurance commission
3. When can an insurer cancel my policy?
A. An insurer may cancel a policy mid-term under the following conditions:
I. If you commit fraud or misrepresent your driving record or other material facts when applying for your insurance or while making a claim;
II. If there exists a matter or issue related to the risk that constitutes a threat to public safety;
III. If there is a change in the condition of the risk that results in an increase in the hazard insured against;
IV. If you fail to pay your premium when due; or
V. If the driver’s license or motor vehicle registration of the named insured or any covered driver under the policy is suspended or revoked for reasons related to the driving record of the named insured or any covered driver. A binder is temporary evidence of insurance provided by the producer or insurance company until a policy is actually issued.
VI. Under Maryland law, insurers may use a 45-day underwriting period and if they find you are not eligible within that period of time, your policy may be cancelled with a fifteen- day notice to you. You should answer all the questions on the insurance application completely and honestly. An insurer may cancel your coverage or raise your premium if you are dishonest.
VII. I wrote a check to purchase automobile insurance, and the insurance company gave me a “binder”. But then my check bounced and the company told me I did not have insurance. Can the company do that? Yes. If your initial premium payment is not honored by your bank and the insurance company informed you at the time of application that you would not have coverage unless the initial payment was honored by your bank, then you will not have insurance coverage. The insurance company must notify you immediately, or the next business day after it receives notice from your bank that your payment was not honored and that your insurance coverage is rescinded. But your insurer is required to continue or reinstate the policy or binder without a lapse in coverage if you promptly notify the insurer that the financial institution made an error and provide supporting documentation, or you pay the insurer the amount of the initial premium within five business days of the date on the notice from the insurer that the payment was not honored.
VIII. Can my insurer cancel my policy for late payment? Your insurer may cancel your insurance policy for nonpayment of a premium, even if the payment is just one day late. The insurer must mail a notice that the policy will be canceled for nonpayment of premium 10 days in advance to the named insured’s last known address, or, if the insured elected to receive notices from the insurer electronically, to the electronic mail address where the insured has consented to receive notices. Some insurers have guidelines for late payment and may reinstate your policy when the payment has been made after its due date, but this is not required under State law.