People always ask us, “Will my insurance go up if I use my uninsured motorist coverage?”
That’s a good question to ask because there are a lot of uninsured (or underinsured) motorists out there.
According to some estimates, roughly 10% of motorists who ride the roads every day here in California carry no auto insurance at all. So getting into an accident with an uninsured motorist seems almost inevitable. While failing to have liability coverage is a direct violation of California law, nearly 4.1 million drivers operate their vehicles daily without adequate insurance to protect the innocent victims they may injure through carelessness, recklessness, or just plain disregard.
To add to the danger, uninsured motorists are more likely to be involved in crashes (whether they cause them or not). Indeed, statistics show that while uninsured motorists represent just 10% of all Californians, they’re involved in 15% of all motor vehicle accidents in the state.
So, as you can see, it’s not an unreasonable thing for you to be asking whether your insurance rates will go up after you use your uninsured motorist insurance. But should the fear of a rate increase keep you from filing a claim?
You’ve Heard the Horror Stories
Most people ask us about uninsured or underinsured motorist claims because they’ve heard from family and friends who have been in no-fault accidents and have had their premiums jump as much as 15% or more after reporting the accident. In effect, these law-abiding people are getting financially penalized for something they had little (or even no) control over.
I’d like to tell you that these things don’t happen. The whole scenario seems unfair, punitive, and geared to put the financial hurt upon the consumer, not the insurer who is supposed to absorb the impact and protect the individual. But, unfortunately, they do. In the vast majority of states, insurance providers can raise rates after underinsured or uninsured claims are filed. They don’t always and each company’s policy differs greatly but the risk of rising payments is real.
In fact, a nationwide study found that, on average, insurance companies will raise premiums by 9.32% after a no-fault accident resulting in an uninsured motorist claim. The study went further to examine each of the top insurers in the nation and found that Progressive was the most aggressive, effectively “punishing” drivers with an average rate increase of 16.6% after they made an uninsured motorist claim. State Farm was found to be the most lenient with a 0% increase for uninsured motorist claims on your own insurance policy.
Why are insurance companies allowed to raise rates even when you’re not at fault for an accident? If you live in California, they’re not.
I come across California personal injury clients who often do not want to use their own uninsured motorist insurance coverage because they are absolutely sure that it will increase their premiums. They’ve heard horror stories about fender benders that have resulted in premiums hundreds of dollars higher or even cancellation of insurance policies. But, as a California personal injury attorney I can assure you that your insurance company should not raise your rates for making an Uninsured or Underinsured Motorist claim on your policy. In fact, in most cases, doing so may violate long-standing California legal statutes.
California Law Forbids Insurers to Raise Rates
That’s right, California has enacted a proposition designed to protect innocent motorists from the predatory tactics of insurance carriers. California’s Proposition 103 contains clauses that forbid insurance companies from raising rates after an individual makes an uninsured motorist claim. That means your rates cannot legally go up when you try to get the compensation you need and deserve after an auto accident.
This makes California one of only two states in the country which has legislation on the books preventing insurance companies from arbitrarily raising rates after a consumer files an uninsured motorist claim following a no-fault accident.
There are exceptions to prop 103 (most notably if you make multiple uninsured motorist claims in a short amount of time) but this binding legal precedent takes much of the worry out of filing an uninsured motorist claim.
Filing a Claim Doesn’t Guarantee Payment
It’s important to keep in mind that just because you can file a claim with your insurance company after being involved in an accident caused by an uninsured driver, that doesn’t mean your insurance company has to pay. Indeed, insurance companies are legally allowed to deny claims for any number of reasons. They could:
- Dispute the details of the accident
- Misplace liability (fault) on you when none should be
- Argue that your injuries and financial losses don’t warrant a claim
- Nitpick the filing process and deny or prolong your payment because of improperly filed paperwork
If you are lucky enough to be granted a payout without extra hassle, that payout is likely not as large as it could be. Simply filing a claim does not mean that your insurance company has to give you the amount you requested based on your calculated need. Indeed, the first offer is almost always lower than you’ve initially requested. These low-ball offers are designed to save the insurance company money but may very well leave injured victims struggling to juggle their expenses after an uninsured driver accident.
That’s why I always recommend that any victim involved in a car accident always consult with an experienced car accident lawyer. Having a good personal injury attorney on your side not only increases your likelihood of getting a payout quicker but also considerably increases the likely amount of that insurance payout.
So Why Would Your Rates Go Up After an Insurance Claim?
But if insurance companies aren’t allowed to raise your insurance rates after filing an uninsured motorist claim, why have we all heard stories from friends and family of that exact thing happening?
The primary reason your insurance premiums will go up is that your insurance company has deemed you to be an at-risk driver—even if you aren’t a bad driver at all.
You see, insurance companies assign the price of a policy based on a risk assessment that takes into account multiple factors, including:
- Your driving record
- Your age
- The type of car you’re insuring (even the color)
- Where you park your vehicle at night
- How you use the car (daily commuting vs. occasional travel)
And many more.
They take those factors and feed them into a mathematical formula that essentially estimates the risk of your filing a claim—A.K.A. “costing the insurance company money.”
When you have an uninsured motorist accident—even if you didn’t cause the accident—that calculation automatically increases the risk factor associated with your name. Therefore, some insurance companies may increase your premiums to “hedge their bets” against you being involved in another accident, and recoup their monetary losses before they even happen.
Generally, these rates will not ever increase after just one uninsured motorist claim. However, you do not get “carte blanch” to use your UM/UIM coverage in an unlimited fashion. Each time you use this uninsured/underinsured motorist coverage, or your med-pay coverage, it will be a factor that could weigh in favor of your carrier increasing your premiums.
For example, if you were to get in three or four accidents in a short period of time (say 2 or 3 years) your insurance carrier could evaluate you as a high risk, and therefore likely increase your premium. The bottom line is that using your own med-pay or uninsured motorist coverage will not automatically increase your insurance premium but it is a factor in evaluating whether or not your premiums should be increased next time your company reevaluates you.
Exceptions to California’s Prop 103 Insurance Law
The California state legislature has repeatedly revised Proposition 103 in order to keep it relevant to the modern insurance industry. One of the biggest alterations was an amendment that laid out three violations on the part of the insured that would effectively void protection afforded to their personal premium rates – meaning that if they made an uninsured motorist claim their insurance rates would increase.
For the most part, the first two allowances would void the policy as well—in almost every case. The last is really the most important for drivers in California.
(A) Non-Payment of Premium
Insurance companies can void policies and adjust premium rates significantly higher if the insured fails to pay their premium in the time-frame laid out in their original contract. Some insurance providers make allowance for late or reduced payments. Some do not. This should not come as a shock. An insurance policy is a legally binding contract between the insured and the insurer. If the insured doesn’t live up to their end of the bargain, they shouldn’t expect the insurer to either.
(B) Fraud or Material Misrepresentation Affecting the Policy or Insured
Instances of insurance fraud or deliberately misrepresenting a claim can result in policy cancellation, financial penalties, or increased claims. Again, these actions break the contract between the insured and the insurance carrier, and California has no jurisdiction to prevent insurance companies from protecting themselves from predatory individuals.
(C) A Substantial Increase in the Hazard Insured Against
This is simply a risk assessment by the insurance carriers. If their risk increases substantially, they may have the right to increase premiums.
In the instance of home or property insurance (which prop 103 also covers) this could be attributed to deforestation (landslides), drought (wildfires), or any other natural phenomenon.
In the case of car insurance, this clause almost always refers to a driver being involved in multiple accidents—even no-fault accidents or accidents in which the other driver was deemed to be at fault.
There are a few exceptions. If an insured driver radically increases the number of miles they drive during their daily commute, racks up multiple speeding tickets, or switches vehicles to something objectively riskier (some cars are more dangerous than others) the insurer could legally raise premiums to cover their increased risk.
Is Simply Not Dealing With Insurance at All the Right Way to Go?
If this all sounds like too much and you’re thinking about either not getting the damage to your vehicle fixed or paying out of pocket so you don’t have to deal with anybody’s insurance company and risk a rate increase—think twice. In some cases, being involved in an accident—even a no-fault accident—and failing to file an insurance claim can be grounds for your insurance company to raise your next premium.
As you can see, even when you think the situation is cut-and-dry, even if you think you’ve found the best way out of a problem, even if you think you don’t need to involve an insurance provider, you might be doing more damage than you think.
You Need Uninsured Motorist Coverage
But if uninsured motorist coverage is such a hassle, why bother with it at all?
If you don’t have uninsured or underinsured motorist coverage, GET IT! This coverage could be the difference between monumental medical bills that you cannot pay because the person that caused your accident does not have any, or adequate, coverage, and you being able to get back to your normal life as soon as possible after a life-altering accident.
UM/UIM coverage exists to give you peace of mind, that in case anything goes wrong, you are covered. You cannot trust someone else to have coverage that is adequate for injuries that they never intend to inflict. Indeed, California only requires that motorists carry $15,000 worth of liability coverage. That may not be nearly enough to get you back on your feet.
Further, you can even tap into your uninsured motorist coverage if you are involved in an accident as a pedestrian or cyclist. Read here about how having underinsured motorist insurance can cover you as a pedestrian or cyclist.
Indeed, the average cost of medical expenses associated with a car crash was over $15,400 way back in 2013! And that figure doesn’t even account for associated property damage.
Not sure how much coverage you need? Read this article about how much uninsured motorist insurance you should get to learn if your current coverage is enough. We’ll show you how most people dramatically underestimate the financial impact of even moderate car crashes and how unexpected expenses can be seriously detrimental to nearly every aspect of your long term recovery.
Hedge Your Own Bets with an Attorney on Your Side
Even if you have great uninsured motorist coverage, you want to be sure making an uninsured motorist claim won’t raise your rates. You also want to be sure that you get all the compensation you need and are entitled to under your uninsured motorist coverage.
Be sure to consult with an experienced personal injury attorney right away if you have been seriously injured in a bicycle, pedestrian, motorcycle or auto accident. See if Sally Morin Personal Injury Lawyers is a good fit for you.