Will my insurance rates go up if I make a UM or UIM claim? The short answer is NO.
Auto liability insurance is required in Arizona. The mandatory minimum coverage is $15,000 per person/$25,000 per occurrence. Liability coverage protects you and your assets if your negligence causes a collision and injury to another person. If you purchase the state minimum, you are protected up to $15,000 for each person your conduct injures up to a total of $25,000 for each occurrence or collision. Governor Ducey signed a law last year that boosts these minimums to $25,000 per person/$50,000 per occurrence effective July 1, 2020.
Another important coverage you can buy with your auto policy, and the coverage that is essential and important is Underinsured Motorist Coverage (UM) and Underinsured Motorist Coverage (UIM). This coverage is sometimes called first-party coverage. It is relatively inexpensive, and it protects you from the negligence of others. These coverages kick in when someone else causes a collision, but they either do not have insurance or are underinsured, without enough insurance to take care of the harms they caused.
We are commonly asked what happens if you file a UM or UIM claim. Many people worry that if they file a claim with their own insurance company, they will see a huge rate hike.
Arizona law prohibits insurers from raising your rates as a result of an accident in which you were not at fault. A.R.S. § 20-263 says, "No insurer shall increase the motor vehicle insurance premium of an insured as a result of an accident not caused or significantly contributed to by the actions of the insured." If you are not at fault for a collision/claim, your insurer cannot raise your premiums. It is illegal.
The statute goes on to say, "Any insurer which increases the premium as a result of accident involvement shall notify the insured of the reason for such increase." So if your premiums do go up, your carrier is required to tell you why. And they must point to a valid reason for the increase. A valid reason might include speeding tickets, but it does not include making a claim under your UM or UIM policy. So if your premiums ever do go up, you can and should ask why.
But don't forgo a valid UM/UIM claim out of fear that your rates will rise. What is the use of paying premiums for protection if you are just going to be punished for using what you have paid for?