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UPDATED: Mar 13, 2020
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Car insurance rates are determined by several factors, but no single element affects your insurance premiums as much as your driving history. Individuals who have been involved in auto accidents pay higher premiums than those who have never been in an accident. In part, this is because the insurance company must recover the cost of a claims settlement. Your insurance costs may also raise if your insurance company believes you are at a high risk of being involved in another accident.
How does my car insurance company know when I have an accident?
The most common way that an insurance company learns about an auto accident is that the accident is reported to them. Whenever you are involved in an accident, you may file a claim with the insurance company or simply call to report that the accident occurred. Anyone else involved in the accident may also contact your insurance company.
For example, if you are involved in a three-car collision, either of the other two drivers might call your insurance company to file the claim. This means that by the time you call your insurance company the claim may already have been filed. You are still able to give your side of the story at this point as your insurance company cannot accept or deny liability until speaking with you.
A claim may also be filed by the other party’s insurance company. If you are at fault for an accident and the person you hit reports the claim to his insurance, that insurance company will call your company to determine if a claim has been filed. If not, it will start the claim and forward over the claims documents and bills through a process called subrogation. At this point, your insurance company will contact you to confirm the information and discuss liability with you.
Even if your accident involved no other vehicles, a claim may be filed against you if property was damaged. For example, if you hit a fence, tree or guard rail the property owner might file a claim against you. You may not realize that you collided with another person’s property, but the police might notify the owner of the property if they are dispatched to the scene. In this case your information would be extended to the property owner so that the claim could be filed.
Generally, a claim will never be filed against your policy without your knowledge. As soon as a claim is started, the insurance company will contact you to get your side of the story. If you don’t respond to their calls and letters, however, the company may be forced to settle the claim without your side of the story.
What If no claim is filed?
Claims are not the only way that an insurance company learns about an accident. If the police come to the scene of your accident and file a police report, that report will eventually be made available to your insurance company. This is also how your insurance company learns about speeding tickets, traffic violations and other driving infractions you might make.
You are also required to report any accident you are involved in to your state DMV. If you file a police report, the police will usually do this for you. If not, you will need to file the report yourself. Failure to inform the DMV of the accident and provide insurance information might result in your license being suspended if the DMV learns of your accident and no claim has been filed.
Car insurance companies also utilize a centralized claims repository for claim information. Called a CLUE (comprehensive loss underwriting exchange) report, this enables all insurance companies to access your claims history. This means that whenever you purchase a new insurance policy, all of your previous accident and claim information will be available to your new company.
It also means that if any accident you have ever been involved in is reported to any insurance company or police department, your information will be accessible through a CLUE report even if a claim is never filed against your policy.
This is why it’s always a good idea to file a claim with your insurance company, even if you don’t intend to use the coverage for your vehicle. Your insurance company will almost certainly learn about the accident regardless of whether or not you file the insurance claim.
By calling your car insurance company first, you ensure that you are able to give accurate information to your company regarding what happened in the loss. Your insurance company will also be able to provide you with any additional information and paperwork that you may need in order to conclude the claims process.