FAQ about Automobile Insurance (2)
I recently had a car accident. Will my car insurance bill automatically go up?
The answer to this question depends upon the company, and depends upon whether the accident was at-fault or not.
Some insurers will increase your auto insurance premium after a certain number of not-at-fault accidents over a specified dollar amount. The insurers do this through a rating mechanism called “Tier Rating”. Usually you will not be rated in a higher tier simply because of one not-at-fault accident. A typical tier rating rule might read something like: “two or more not-at-fault accidents where each accident caused a claim payment in excess of $500″ rate the vehicle in the sub-standard tier. Yiost, but not all, insurers will rate a driver in a higher rated tier after one at-fault accident.
See Post 5 for the discussion of how insurance companies determine the premium you pay for auto insurance and Post 6 for the discussion on Tier Rating.
Do all insurance companies have the same number of Tiers?
No. Some insurance companies have only one tier. Some may have as many as 14. This is just one reason why it’s important to shop around. Smart insurance buyers will shop many companies to choose the tiers and coverages that are best for them, and get into the best tier that they can. Remember different companies have different criteria for their tiers.
How do I know what tier I belong in?
Auto insurance companies in New Jersey are required to send you documentation that explains how your policy is rated. This will include a section on Tier Rating. The documentation is usually called a “Rating Information Form”.
If you still can’t determine what tier you belong in, don’t hesitate to call your agent, broker or your insurance company directly to get an explanation.
What do I do if I don’t agree with the Insurance Company’s explanation?
If you think that you have been placed in a wrong tier, or that your policy has otherwise been incorrectly rated, you can file a complaint with the Department of Banking and Insurance.
