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.
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:
Average premium after at-fault accident
% Change from before to after at-fault accident
$2,174 per year / $181 per month
$2,226 per year / $185 per month
$2,772 per year / $231 per month
$2,358 per year / $196 per month
$1,617 per year / $134 per month
$1,997 per year / $166 per month
3,017 per year / $251 per month
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.
Car insurance rates after an accident explained
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.