“MY INSURANCE COMPANY TOLD ME MY RATES WILL GO UP IF I USE MY INSURANCE” (AND THE AUTO ACCIDENT WAS NOT MY FAULT!)

I hear this threat all too often, and it really ticks me off.

Scenario: client is involved in a crash that’s not his fault. His car needs to be repaired, but he hasn’t heard squat from the at fault party’s insurance company yet. So he calls his insurance company (in this case, Allstate).

The adjuster tells him (before he hires me): if you go through us to get your car fixed, your rates may go up, so it’s better that you go through the at fault party’s insurance company.

This is hogwash. What the adjuster didn’t tell the client is that in Ohio (and the majority of other states), if your insurance company pays for your car repairs, they have a right of subrogation against the at fault party’s insurance company.

Subrogation is a fancy legal term for reimbursement. Here’s how it would work. Your insurance company pays for your repairs. They notify the at fault party’s insurance company of the amount of repairs, and collect back every penny they paid.

And if you had a $500 or $1000 deductible, your insurance company will actually collect or capture that deductible for you, and send you a check in the amount of the deductible.

So if you’re not at fault, and the insurance company gets back every penny, how on earth can they raise your rates in this situation?

In my opinion, they can’t. More likely, this is a scare tactic designed to deter you from using your own insurance company to pay for your losses. Less paperwork for them, more hassle for you in many situations.

And if it IS true that they can raise your rates, all the more reason to drop them like Lance Armstrong at a truth convention and shop around.