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Auto Insurance Claims/surcharge for no claim

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Expert: webfoot - 6/17/2006


Question
my daughter bumped a car that stopped suddenly in and intersection. There was no damage to the car she hit or our car. The man took all the info he needed from her and then left. He sent us a letter wanting over five hundred dollars, but at the same time notified our insurance company. They investivated but never told us of their findings and tacted on a 1000 dollar surcharge for three years to our insurance primium. No damage was done, no police report, no claim paid. Does the insurance company have the right to do that to us? Nobody was out anything and now we have to sell our car because we can't afford the insurance.

Answer
Sounds like an expensive lesson learned.

An insurance policy is a contract.  One of your duties under that contract is to report all accidents regardless of perceived damages.  You also have the duty to mitigate (minimize) all damages and promptly reporting the accident allows the insurance company to do this on your behalf.  By being allowed to investigate the claim promptly, the insurance company can document the damages before the claimant has a chance to have the vehicle repaired and in turn, try to profit from the accident.  As you violated the terms of the contract, you are fortunate that they only tacked on the surcharge and didn't simply cancel your policy.  The logic that they are using is that someone who fails to report claims is not acting in a responsible manner and is therefore, a higher risk to insure.  

If the company did not advise you of the findings, then how do you know that there was no payout?  Rear end collisions almost always result in hidden damage to the vehicle that is rear ended.  The reason is that when both cars are braking, the rear car hits the front car very low and causes damage under the flexible bumper cover.  

You can verify any claims paid through www.choicepoint.com
In some states, you may be entitled to a free report.  

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webfoot

Expertise

Auto damage, liability, insurance fraud. I am a full time auto insurance adjuster with experience in collision, theft, liability and fraud investigation. I am also an ASE Master Auto Tech and I-Car Collision Platinum certified. My experience includes 15 years in the auto repair industry, a B.S. in Criminal Justice, Law enforcement and auto insurance. ****** NO "PRIVATE" QUESTIONS WILL BE ANSWERED. I HAVE FOUND THAT NEARLY ALL PRIVATE QUESTIONS COME FROM PEOPLE WHO ARE CONSIDERING OR ATTEMPTING TO COMMIT FELONY INSURANCE FRAUD AND I'M NOT HERE TO HELP YOU! ****** I AM HERE TO ANSWER AUTOMOTIVE REPAIR, CLAIMS PROCESS AND SOME SIMPLE LIABILITY QUESTIONS. I CANNOT ADDRESS COMPLEX LIABILITY SCENARIOS WITHOUT HAVING ALL OF THE INFO FROM BOTH SIDES IN FRONT OF ME. QUESTIONS ABOUT PREMIUMS OR HOW INSURANCE IS RATED SHOULD BE ADDRESSED TO YOUR PERSONAL INSURANCE AGENT WHO KNOWS A WHOLE LOT MORE ABOUT YOUR HISTORY THAN I DO. I'VE NEVER SOLD INSURANCE AND DO NOT KNOW IF YOUR INDIVIDUAL INSURANCE RATES WILL GO UP IF YOU MAKE A CLAIM. THOUGH I'VE HANDLED SOME VERY MINOR SOFT TISSUE INJURY SETTLEMENTS, I PREFER NOT TO ANSWER INJURY RELATED QUESTIONS. I'M NO INJURY EXPERT AND I'LL LIKELY SAY SOMETHING TO HURT SOMEONE'S FEELINGS AS I BELIEVE THAT MANY SOFT TISSUE PAIN AND SUFFERING CLAIMS ARE OVER DRAMATIZED. UNLIKE MANY OTHERS, I AM ON THIS FORUM AS A VOLUNTEER WITH NO PRODUCTS OR SERVICES TO SELL AND PROMISE AN UPFRONT ANSWER BASED ON MY EXPERIENCE IN BOTH SIDES OF THE INDUSTRY. IF YOU PROVIDE ME WITH A HONEST VERSION OF EVENTS, I PROMISE A CANDID AND HONEST ANSWER IN RETURN. I CANNOT ADDRESS ALL CLAIM SCENERIOS DUE TO DIFFERING STATE LAWS AND REGULATIONS, BUT WILL DO MY BEST. PLEASE REMEMBER THAT AN HONEST ANSWER MAY BE ONE THAT YOU DON'T LIKE SO IF THAT IS GOING TO BE A PROBLEM, PLEASE DON'T ASK THE QUESTION. LASTLY, I DO NOT ACCEPT RATINGS AS I DON'T DO THIS FOR RATINGS AND WISH TO SPEAK FREELY.

Experience

20 years in automotive industry, Currently in insurance claims, worked actively as technician and shop owner until about 10 years ago. Current ASE Master Auto Tech and I-Car Platinum Collision Certifications, B.S. Criminal Justice and 10 year auto insurance/extended warranty background

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