The Real Cumulative Cost of an Auto Insurance Claim

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Practicing safe driving techniques is always a good idea, and for some extremely important reasons. Avoiding personal injury is one of the most important things you can do on the road, and being a responsible driver is good for everyone around you as well, but what happens when an accident cripples your car or lands you in a hospital bed? What happens when you have to make a claim on your auto insurance policy?

Many simply think, “Well, I’d need to pay my premium,”, but that’s not the entire truth. The cost of filing a claim may not be immediately apparent to all drivers, but a recent study conducted by InsuranceQuotes.com shows that paying your premium is just the tip of the iceberg. Even in ideal circumstances, a single accident may cost you hundreds annually in increased insurance rates. The national average increase in car insurance premiums after filing a single $2,000 claim was a staggering 41%.

Drivers in California are in an even more disadvantageous position. While 41% is the national average premium increase, in California, that number is a bit higher. A single $2,000 claim could increase your premiums by an average of 86%. Even drivers in Maryland suffer an average increase of 22%, the lowest state-wide average in the country. If you apply those averages to the National Association of Insurance Commissioners’ average car insurance premium of $815, the financial damages become a little more tangible – a single accident could cost you $335 annually in increased premiums.

The math behind these premium increases are based off of the assumption that a driver who is in an accident is more likely to be in a second accident. Luckily, that doesn’t happen to everyone, but if someone is forced to file a second claim, their insurance policy’s premium will skyrocket a national average of 93%, nearly doubling the cost of their insurance premium.

With high average auto insurance quotes, California is at a huge disadvantage. They also top off this list of the five states with the highest average increase in premiums after a single $2,000 claim.

1. California: 86% average increase
2. Massachusetts: 83% average increase
3. New Jersey: 69% average increase
4. North Carolina: 58% average increase
5. Minnesota: 52% average increase

To give that list a little bit of context, here are the five states with the lowest average premium increase…

1. Maryland: 22% average increase
2. Michigan: 25% average increase
3. Montana: 27% average increase
4. Oklahoma: 27% average increase
5. Mississippi: 28% average increase

Even in the states where a claim might not make your rates skyrocket, the added costs can still add up to hundreds of dollars over the course of a few years. These rate increases are often expected to last between three and five years, giving your plan plenty of time to cost you hundreds of additional dollars before your premiums go back down, even if you don’t file a second claim during that time.

If your rates increase, what can you do? Well, the first course of action would be to shop around and compare competing auto insurance rates. Every policy is different, and what you need from your insurance company may have changed since you originally purchased your policy, so why not shop around for something more fitting your lifestyle, budget, and needs? Contact us today and our experts would be more than happy to answer any of your questions and help you find a car insurance plan that’s right for you.

How do you think these rate increases could impact an unlucky family? Do you think auto insurance companies should change the way they handle clients who’ve been in an accident? Let us know in the comments section below!