Imagine this scenario: You’re driving carefully when an uninsured or underinsured driver crashes into you. It isn’t your fault, but medical bills and vehicle repairs quickly pile up. Fortunately, you’ve paid for Uninsured/Underinsured Motorist (UM/UIM) coverage as part of your auto insurance policy. But then the question arises, “Will filing a UM/UIM claim increase my insurance rates?” You’re not alone in wondering this, and the answer depends on several factors.
This blog breaks it down for you, covering the purpose of UM/UIM coverage, how insurance companies treat these claims, differences by state laws, and factors influencing rate changes. By the end, you’ll not only understand how UM/UIM claims work but also how to protect yourself if you’re in this situation.
What Is UM/UIM Coverage?
Uninsured/Underinsured Motorist Coverage is an essential component of auto insurance to protect you when an at-fault driver doesn’t have insurance or has insufficient coverage to pay for your damages. With nearly 1 in 8 drivers in the U.S. uninsured, according to the Insurance Research Council, UM/UIM coverage acts as a financial safety net. It helps cover medical bills, lost wages, and sometimes property damage beyond what the at-fault driver’s coverage can handle.
If you’re the victim in such situations, UM/UIM saves you from bearing the financial fallout while allowing you to recover without additional stress.
Does Filing a UM/UIM Claim Increase Insurance Rates?
One of the most common concerns for policyholders needing UM/UIM coverage is whether filing a claim under it will lead to higher premiums. The general rule in insurance is that not-at-fault claims are less likely to result in rate increases. However, there’s no universal answer for UM/UIM claims. It largely depends on the state you live in, your insurance provider’s policies, and your personal claims history.
The General Rule for Not-At-Fault Claims
Typically, insurance companies do not penalize policyholders by raising premiums when they file claims for accidents that were not their fault. This is because insurance pricing is risk-based; penalizing individuals for events outside their control would seem unfair.
For example, if someone rear-ends your car at a red light, your insurance company recognizes you as not at fault. This principle often carries over to UM/UIM claims since these scenarios also involve an at-fault party who lacks adequate coverage.
Are UM/UIM Claims an Exception?
While not-at-fault claims generally shouldn’t raise your insurance rates, UM/UIM claims can sometimes be treated differently. Some insurers may view the filing of any claim, even a UM/UIM one, as a potential indicator of risk. They might argue that a driver who requires UM/UIM coverage could be more prone to situations where they will need it again.
That said, many states have laws in place to prevent these claims from impacting your premiums. Case in point:
- John’s Case in California: John was hit by an uninsured motorist, leading him to file a UM claim. Thanks to California’s state laws protecting against premium hikes for not-at-fault claims, his rates remained unchanged.
However, not every state offers such protections, which brings us to the importance of understanding local laws.
How State Laws Affect UM/UIM Claims
Insurance is regulated primarily at the state level, which means the impact of UM/UIM claims on your rates can vary greatly. Some states, like California, explicitly prohibit insurers from raising rates due to not-at-fault accidents, which includes UM/UIM claims. Other states, however, may not have such consumer protections.
Take Maria’s Case in Texas, for example. After being injured in a hit-and-run accident, she relied on her UIM coverage to cover her medical bills. Aware of the potential implications, Maria consulted with a legal expert who helped her ensure the claim didn’t negatively affect her premium due to varying state regulations.
Meanwhile, in Florida, a class-action lawsuit revealed unfair rate increases tied to UM/UIM claims. This legal battle sparked changes in legislation, illustrating that unfair practices can sometimes lead to important consumer protections.
Other Factors That Impact Insurance Rates
While the specifics of UM/UIM claims can sometimes influence your rates, it’s also important to understand the broader factors that might impact your premiums:
- Claims History
A history of frequent claims (even not-at-fault ones) may raise a red flag for insurers, potentially resulting in higher premiums.
- Driving Record
Speeding tickets, at-fault accidents, and other violations increase risk, often leading to higher rates.
- Geographic Location
Living in areas with high rates of uninsured drivers or a history of accidents can affect both your base premium and how a UM/UIM claim is treated.
- Insurance Provider
Rate policies vary by insurer, so shopping around for the right provider is essential.
- Policy Details
Your coverage limits and deductible amounts also play a role in determining your costs.
When Should You File a UM/UIM Claim?
Filing a UM/UIM claim makes sense under the following circumstances:
- You’ve been in an accident caused by a driver who lacks insurance or has insufficient coverage.
- The at-fault driver cannot be identified (e.g., in a hit-and-run).
- The cost of damages or medical bills exceeds your deductible and other potential forms of compensation.
It’s important to weigh the benefits of filing the claim against any potential long-term impact on your rates. Consulting an attorney can help you make an informed decision.
Why Consulting an Attorney is Essential
State laws regarding UM/UIM claims are complex, and insurance companies don’t always act in your best interest. If you’re unsure whether filing a claim might impact your premiums, a lawyer specializing in insurance or personal injury law can provide valuable guidance.
Take Sarah’s Case in New York, for instance. After filing a UIM claim, Sarah noticed her premiums had increased significantly. A legal expert helped her manage her situation, ultimately advising her to switch to an insurer with fairer policies regarding claim-impact premiums.
Takeaways and Next Steps
UM/UIM coverage is a vital safeguard, but using it wisely requires knowing how insurers handle claims and whether your state’s laws offer protection. Here’s what you can do:
- Understand Your Policy
Review your UM/UIM coverage details thoroughly to know what’s included and how claims are handled.
- Research State Regulations
Familiarize yourself with your state’s laws to understand your rights as a policyholder.
- Consult an Expert
If you’re unsure about how filing a UM/UIM claim might impact your insurance, consulting an attorney can save you time, money, and frustration.
- Choose the Right Insurer
When in doubt, shop around for a provider that clearly defines their policies on UM/UIM claims and values transparency.
Filing a UM/UIM claim doesn’t always mean your premiums will rise, but knowledge is your best defense. By understanding how these claims work and relying on expert advice when necessary, you can protect your finances while securing the coverage you need.
