When you see the word “Primer,” what do you think of? Someone may say, “It reminds me of children’s books.” Another may say, “I think of paint.” Actually, both answers are accurate. A primer is that which has to do with the most basic applications. For children, its learning ABC’s and 123′s and with paint, well, it’s the base coat of paint upon which others are added.

What is an Automobile Insurance Claim?

In the most elementary definition, an insurance claim is simply a request for payment based on the terms of an insurance policy. For example, if you have collision coverage on your car and find yourself in an accident, you will submit a claim for payment to cover the cost of the repairs. When the company receives the claim, they will review it and compare it against what the policy covers before making payment to you. While this is the basic principle behind what a claim is, matters can often get extremely complicated.

Impact of Claims on Cost of Vehicle Insurance

In another article, we looked at the factors of underwriting and rating and how these two items impacted the cost of your automobile insurance premiums. It was pointed out that of all the many items that could have an impact on premium cost, by far the one aspect that was most influential was claims frequency of a particular group.

Yes, your personal claims history can certainly impact your individual premium cost, but group claim frequency will set the base from which individual premiums are built upon.

You ask, “Ok. What group do I fit into?” To answer, we cannot say that you are in just one group. Actually, you will be a member of several different groups. For example, the type of car you drive will categorize you with a group. Your age and marital status will further categorize you with other groups and so on.

Claims frequency, which measures how often an insured event occurs with a group relative to the number of policies within that group, will then heavily influence premium costs. If you share characteristics with high claims groups, you will be charged more for your insurance coverage.

All of the above sounds a bit negative as it alludes to more costly insurance coverage. On the other hand, the opposite side of the same discussion will show that people who share characteristics with low claims classes will be charged lower rates. » Read more: Automobile Insurance Claims