Auto Insurance: How Much Will An Accident Claim Increase Your Premium?

Here’s an infographic from HowMuch.net that charts how much your annual auto insurance premium will go up after just one claim:

Auto insurance companies portray themselves as friendly and forgiving in television commercials, but they are less friendly than you might think. After filing just one claim, car insurance premiums increase by an average of 41.81%, according to an annual study by insuranceQuotes and Quadrant Information Services.

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I was somewhat surprised at how much the initial premiums and subsequent hikes varied state-by-state. On average, the annual premium is $842, but after a single $2,000+ accident claim, it goes up by $352. The source article also states that you should expect rates to remain high for three to five years, depending on the severity of the claim. Ouch.

I didn’t see similar data about smaller claims like a dented bumper. I keep my collision deductible at $1,000 because I’d rather self-insure below that amount, pocket the premium savings, and avoid any rate hikes if I did make a claim. In general, I always try to only pay for insurance when an incident would cause significant financial difficulty (your number may vary).

Comments

  1. Ramona says:

    I just purchased a new car and when I added the new car to my existing insurance the rates were ridiculous. because a previous accident. I shopped around via telephone and got a much better deal with a new insurance company.I also shopped around for home owners insurance and it was 400 dollars lower with another insurance company. When home owners Insurance is included in your mortgage you tend to overlook the fact that the rates have gone up over the years.

  2. The cost of insurance varies a lot from state to state to start with. I think the varying increases by state are mostly a reflection of the varying costs. Idaho has the cheapest rates in the nation and New Jersey has the highest rates. so when rates go up they go up relative to the general costs

  3. Friend says:

    Watch out for teaser rates to lure you in and once you are hooked, BAM!!! rate increase. Happened to me more than once on both Auto and Homeowners policies with Geico, AllState, Liberty Insurance.

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