Does a personal injury claim affect car insurance? The effect on your car insurance premiums following an accident can differ; they might increase or remain unchanged based on your circumstances. Insurance companies are profit-driven, earning money by collecting more in premiums than they disburse in personal injury claims. As these companies are responsible for covering claims when their insured clients are at fault, they have a strong incentive to identify higher-risk drivers and raise premiums accordingly to balance their expenses.
Contact Bogdan Martinovich at (847) 996-1350 for help in navigating the auto insurance claim process.
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Personal Injury Claims and Vehicle Insurance
Following an accident, you can seek compensation for your injuries and losses from the driver who is at fault. This can be done by filing a personal injury lawsuit or submitting a personal injury claim to their insurance company.
What Is Car Insurance?
Car insurance is a contract you establish with your insurance provider. You pay a premium, and in exchange, the company agrees to cover costs as detailed in the policy. For example, liability insurance covers expenses resulting from an accident you cause up to the limits set in your policy. If you are a victim in a car accident, you can submit a claim to the other driver’s insurance company to seek compensation for medical bills, vehicle repairs, lost income, and pain and suffering after an accident. How much car insurance pays for injuries depends on the policy and coverage limits.
There are two primary categories of insurance claims: first-party and third-party claims. A first-party claim is one made with your own insurance company. If you are insured and have an accident, you can request reimbursement for repairs from your insurance provider. On the other hand, if another driver is responsible for the accident, you can file a third-party claim with that driver’s insurance company.
Types of Insurance That Could Impact Your Claim
Understanding the different types of insurance coverage is crucial for reducing out-of-pocket costs after a car accident or traffic incident. Here’s an overview of the insurance coverages that could apply in a personal injury claim:
Liability Coverage
Liability coverage protects you against bodily injuries or property damage that you cause to others while driving. In Illinois, drivers are required to have a minimum of $25,000 per person and $50,000 per accident for bodily injury, along with $20,000 for property damage. This type of insurance extends to medical bills, lost wages due to injuries, and repairs for damaged property, such as vehicles and buildings.
For example, if you’re responsible for an accident that results in $8,000 worth of damages, you would be liable for that amount. Without insurance, you would have to pay this cost out of your own pocket, which can be difficult for even the most prepared victims. However, with auto insurance, you make monthly premium payments. If you have liability coverage up to $20,000 and have kept up with your premiums, your insurance provider will take care of the $8,000 repair, saving you from having to pay it yourself. If the damages exceed your coverage limit, you will be responsible for the additional costs.
Uninsured Motorist Coverage
If you find yourself in an accident caused by an uninsured driver, your uninsured motorist coverage can provide compensation as though they had liability insurance. In Illinois, this coverage is mandatory, with minimum limits set at $20,000 for injuries to one person and $50,000 for injuries to multiple individuals in a single accident. Although property damage coverage isn’t required by law, your insurance provider may offer it for an additional premium. This type of coverage applies when the at-fault driver lacks insurance or their identity is unknown, effectively filling the gap created by their lack of insurance.
Underinsured Motorist Coverage
If you’re involved in an accident with a driver who is at fault and has inadequate insurance to cover your medical costs, underinsured motorist coverage can be beneficial. This type of coverage helps make up the difference between the at-fault driver’s insurance limits and your medical expenses, up to the maximum amount specified in your policy. In Illinois, this coverage is mandatory, with minimum requirements of $25,000 for an individual and $50,000 for multiple injuries per accident. To access this coverage, the other driver must be deemed at fault, and their insurance limits should be less than the limits of your underinsured motorist coverage.
Personal Injury Protection
Personal injury protection (PIP) covers medical expenses and, in some cases, lost wages and other related damages, irrespective of who caused the accident. It is mandatory in states with a no-fault insurance system, but in some other states, it is available on an optional basis. However, Illinois does not provide PIP coverage.
How the Statute of Limitations Affects Car Accident Claims
When dealing with your insurance company or the insurer of another driver, it’s crucial to be aware of Illinois’s statute of limitations for personal injury claims. Under Illinois law, you typically have two years from the date of the accident to file a personal injury lawsuit.
It’s essential to understand that this two-year period is for initiating court action, not for filing claims with insurance providers. Therefore, even if you start your insurance claim within those two years, failing to submit a lawsuit before the statute of limitations expires may result in losing your right to fair compensation.
The Impact of a Personal Injury Claim on Car Insurance
Insurance premiums generally increase after a car accident because the company must cover the costs related to claims. Insurers tend to see past behavior as the most reliable indicator of future risks. Therefore, if you have been in one accident, it raises the likelihood of getting in another. Consequently, the expenses associated with providing coverage for you rise. Typically, rates go up by about 45% following an accident that causes property damage, and by 47% when injuries are involved. However, the impact of an injury claim on premiums can differ, and it’s not guaranteed that your premiums will rise after every claim.
Situations Where Your Insurance Premiums Stay the Same
There are several scenarios where your rates could stay the same even after an accident, including:
You Had a Minor Accident
For minor accidents or fender benders, your insurance rates might not increase automatically. This is particularly true if you have a good driving record. Even if you are found to be at fault and the other driver’s vehicle only sustains minor dents and scratches, any increase in your rates is usually less substantial compared to accidents that involve significant damage.
You Were Not at Fault
Your car insurance premiums may remain unchanged if you weren’t at fault for an accident. Fault can sometimes be clear, like in cases of speeding or DUI. It can also be complex, especially if more than one person was responsible, or insurance companies dispute liability. In such a case, you may require a car accident lawyer who knows how to prove fault in a car accident claim.
A lawyer can gather evidence to prove you weren’t at fault, help maintain your insurance rates, know how car accident settlements are calculated, and negotiate for fair compensation based on Illinois’ comparative negligence laws.
Your Policy Offers Accident Forgiveness
Accident forgiveness is a benefit offered by some auto insurance companies that guarantees your first at-fault accident won’t result in increased premiums. It acts as a sort of “get out of jail free” card, allowing your rates to stay the same, particularly if you have a solid driving history. If your insurance policy includes accident forgiveness, and you are at fault for the first time, your premiums will not go up.
Situations That Could Cause Your Insurance Rates to Rise
There are occasions when your insurance premiums might rise after an accident, including:
You Were Responsible for a Significant Accident
While minor accidents typically don’t lead to a substantial increase in insurance premiums, more serious injuries or damages can have a different impact. If you are at fault in a serious car accident, you can expect your insurance rates to rise much more sharply compared to a minor fender bender.
Your Insurance Policy Had a Safe Driver Discount
Certain insurance policies offer a “safe driver discount,” which lowers your premiums as a reward for maintaining a period without traffic violations or accidents. However, if you received this discount before a car accident and are found to be at fault in that accident, you will lose your eligibility for the discount. As a result, your insurance rates will increase due to its cancellation.
Frequent Claims
Filing multiple claims within a short period may suggest to insurance providers that you present a higher risk, leading to increased premiums.For more information on how an accident could impact your car insurance rates or for assistance with your car accident claim, contact Bogdan Martinovich.
