Planning to file a claim with your auto insurance provider? Here’s what you should know before making the decision to file because your premium rates may increase substantially.
This warning comes courtesy of a joint study between InsuranceQuotes and Quadrant Information Services. According to the data, drivers who make a single auto insurance claim saw their premiums increase on average by 44.1%. The study looked at the impact of claims worth $2,000 or more and compared premium increases in all 50 states and Washington, D.C.
Keep in mind, the reported premium increases weren’t for individuals who have a history of unsafe driving. The study concluded that, even after a single auto claim, premium increases can be significant. Even worse, premium increases following claims have risen incrementally over the last few years.
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Insurance rate effects after an accident
The increase you can expect to see on your insurance premiums after an at-fault accident varies by location, driving record, vehicle and the insurance company. Upon reviewing the data below, we found that drivers should expect anywhere from a 23% to 73% increase in premiums in year one after an at-fault accident.
Here are some typical post-accident insurance rates in the first year following an at-fault accident with popular U.S. car insurance companies:
|Company||Average premium after at-fault accident||% Change from before to after at-fault accident|
Progressive comes in as the insurance company with rates most affected by an at-fault accident within the first year after the accident, with a whopping 73% premium increase. State Farm, with a 23% premium increase, comes in as the insurance company with rates least affected by an at-fault accident.
Insurance rate effects by state
While the numbers show your rates could surge after an accident regardless of where you live, some states report costlier increases than others. As the InsuranceQuotes study noted, the following five states reported the largest premium increases after a single auto claim worth $2,000 or more:
- California: 63.1% increase
- New Hampshire: 60.3% increase
- Texas: 59.9% increase
- Massachusetts: 57.3% increase
- North Carolina: 57.3% increase
States with the lowest premium increases after a similar claim included:
- Maryland: 21.5% increase
- Michigan: 26.1% increase
- Oklahoma: 27.9% increase
- Montana: 30.2% increase
- Kentucky: 30.6% increase
Experts who commented on the study blame the wide swings in premium increases on the fact that insurance regulations largely vary by state. In California, for example, voters passed a proposition in 1988 that limited the factors insurance companies could use to set auto rates. Because California insurance premiums from that point forward could only be based on driving record, average miles driven and years of experience, it’s only natural for at-fault claims to cause premiums to burst.
In Maryland, insurance companies can base premiums on factors including gender, age, occupation, credit score and marital status. The state’s broader base of rules for insurance companies may punish unmarried young men with bad credit whether they’re good drivers or not, but it’s likely the reason Maryland reported the lowest after-accident premium surges of any state.
How long will my rate be higher?
Increases in your insurance premium can last as long as three to five years after an at-fault accident if damages to your vehicle exceed over $2,000. Rates vary, with some insurers charging much more than others.
How to lower your rates
While you can’t change the accident after it’s happened, there are a few steps you can take to try to reduce your premium:
- Ask about accident forgiveness: This is a proactive tip instead of a reactive one, but when shopping for car insurance ask insurance providers if they have an accident forgiveness practice. Not all companies offer this, but those that do will give you one at-fault accident with no increase in premium if you fit certain criteria.
- Consider your deductible: Insurance premiums and insurance deductibles have an inverse relationship. When you select a lower deductible, it results in a higher premium. When you select a higher deductible, it results in a lower premium. If your premiums go up after an at-fault accident, consider increasing your deductible (if affordable) to decrease your annual premium.
- Avoid filing claims for small things: Insurance companies assess your premiums based on the financial risk you pose to the company. More claims can mean more payouts for the insurance provider. If you’ve recently filed a claim on an at-fault accident, don’t submit other claims for smaller things for a while.
Shop around. As you saw from the data we collected above, the percentages of increase to premiums after an at-fault accident vary greatly by company. It never hurts to get some quotes from other providers.
- Increase your credit score. This won’t be an immediate benefit as increasing a credit score can take some time. However, insurance providers seem to offer better premiums to those with credit scores greater than 600.
Which claims increase your rates the most?
Not surprisingly, the InsuranceQuotes study concludes that bodily injury claims can cause your premiums to spike the most.
“Bodily injury claims are filed whenever a driver causes injuries to individuals as the result of an accident,” notes the press release. “And because they are often so costly, every state except New Hampshire requires drivers to obtain a minimum amount of coverage for these circumstances.”
As the numbers show, a single bodily injury claim will result in an average premium increase of 48.6%. However, some states reported larger premium hikes after bodily injury claims, including California (73.2%), New Hampshire (65.9%), North Carolina (65.9%), Texas (64.8%) and Massachusetts (62.3%).
Comprehensive auto claims resulted in the least significant premium increases overall. Unlike bodily injury claims which can result in significant medical bills, comprehensive claims include instances like getting bad gas in your car, hitting a deer or having a tree fall on your car.
In each of these cases, the costs are usually insignificant. Still, the average premium increase after a comprehensive claim was 2% nationally across the board. Only Nebraska (10.6%), Louisiana (9.7%), Minnesota (7.1%), Wisconsin (6.9%) and Iowa (6.8%) reported increases much higher than average.
What if the accident wasn’t my fault?
If your insurance company doesn’t offer accident forgiveness, whether or not your rates will increase after an accident in which you were not at fault is insurance provider specific. Some providers will not increase your premium if this was your first accident, but if you have several accidents, even if you are not at fault, it could result in an increased premium.
Your provider looks at how risky you are to insure. If you have an at-fault accident, you are a higher risk. If you have one not-at-fault accident, you may not be perceived as higher risk. But if you have several not-at-fault accidents, that will increase your perceived risk level with the insurance provider because you are driving in high-risk for accident situations, whether you’re at fault or not.
The bottom line is, while you are better off to have a not-at-fault accident, any accident at all may increase your auto insurance rates.
Frequently asked questions
If I have an at-fault accident, how long will I have to pay an increased premium?
This depends on the insurance provider but with most, you will see a rate decrease after three to five years of no accidents.
If it’s going to cause my rate to increase, should I file a claim?
If you are involved in an at-fault accident, you will not have a choice to file a claim or not unless the other party in the accident agrees not to file a claim.
However, if it is not an at-fault accident, get an estimate of the cost to repair your vehicle. If it is at or above your auto insurance deductible, find out how much it will affect your annual premium and then determine whether it makes good financial sense to file the claim. If the damage estimate is below the deductible, it will most often be in your advantage to avoid filing a claim.
Should I file a police report after an auto accident?
We recommend filing a police report after any and all auto accidents. This gives you the official record necessary to file a claim and covers your bases in the event a lawsuit is filed by another involved party.