Car insurance market, in general, and a person's car insurance policy, in particular, can turn on a sudden, natural disaster, holding ramifications for the future. Car insurance policy claims increase which drives up future insurance rates due to insurer risk management procedures. Despite raising insurance rates, the car insurance market over-all loses money. Catastrophic events and unforeseen natural disasters have a negative effect on total premiums collected for an insurer. These situations reduce the number of insurers subsequently willing to cover risks, according to state insurance analysts.
Some companies may exit a state insurance market altogether reducing car insurance policy options and increasing costs. Multiple claims in sudden disaster areas may overwhelm the system for a while and slow down response to the disaster area as well as unaffected areas. Natural disasters tend to have an add-on effect affecting the car insurance market and car insurance policies. Flash floods can total a vehicle. Tornadoes, hurricanes and earthquakes can destroy cars in a moment. Other sudden events such as hailstorms or wildfires may damage or destroy vehicles in unforeseen as well as visible ways. Many standard policies don't cover natural disasters, so it's necessary to add levels of comprehensive coverage. People living in areas prone to disasters can get natural disaster extensions covering some, or all, effects at higher premiums.
The actual arrival of such an event, and related claims, makes future coverage more difficult to obtain and more costly when it is available. Natural disasters also affect the car insurance market since each car insurance policy must take into account additional damage caused by such events. The usual insurance coverage oversight is required, knowing what is in the policy and what isn't covered. Car rental insurance may be required to avoid large rental expenses. More costly comprehensive coverage may be appropriate. It's best to shop around first, before disaster strikes, analysts say. Car insurance policy includes a claim number and information about vehicle inspection procedures to determine damage estimates, rental car coverage, towing assistance if needed and payment options. These will be considered in setting new rates after disasters or whether to insure at all.
A serious disaster can complicate the standard car insurance market process. The standard rule is contact the company as soon as practical. Provide it with any relocation or temporary contact changes. Take pictures of the damage if possible. Determine what time limits might apply to the situation - extensions may be possible in state and federally declared disasters - and whether the policy pays for a rental car and other details. It's important to know how natural disasters affect the car insurance market as a whole.