Study: Single Auto Insurance Claim Can Cause Large Premium Spike
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Study: Single Auto Insurance Claim Can Cause Large Premium Spike

A new study found that drivers who file a single auto insurance claim of $2,000 or more will see an average premium increase of 44.1 percent.

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A new study found that drivers who file a single auto insurance claim of $2,000 or more will see an average premium increase of 44.1 percent.

Filing a second claim in one year will trigger an average annual premium increase of 99.4 percent, according to the study by insuranceQuotes and Quadrant Information Services.

According to the National Association of Insurance Commissioners, the average cost of an auto insurance premium in the United States is $841, which means an increase of 44.1 percent would result in a $371 spike.

Now in its fourth year, the study found that the premium spike for a single claim in one year is 6 percent higher and the spike for two claims in one year is 13 percent higher compared to 2014.

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Claims Will Continue to Get More Expensive

Using a hypothetical 45-year-old married female driver who is employed, has an excellent credit score, has no lapse in coverage and has filed no prior auto insurance claims, the study looked at how much annual premiums can go up, on average, after filing one of three different types of claims:

  • Bodily injury
  • Property damage
  • Comprehensive

The study also looked at the impact of the claim’s dollar amount ($2,000 or more) and compared the average premium increases for all 50 states and Washington, D.C.

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The study’s findings indicate that average premium increases after filing a single claim can be significant, and that these increases have, on average, gone up steadily over the past four years, suggesting that the expense of filing an auto insurance claim will continue to rise.

Another sign that premiums could increase: State Farm, the nation’s largest auto insurer, recently reported a $7 billion underwriting loss from auto insurance for 2016.

Premium Spikes Typically Hit At-Fault Drivers

It’s important to note that premium increases vary by the claim type and typically only kick in for accidents in which you’re at fault. If someone hits you, his or her insurance will cover the claim, and typically your rates won’t be affected.

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For instance, a single bodily injury claim – which is filed whenever you cause injuries to individuals as the result of an accident – will result in an average premium increase of 48.6 percent, according to the study by insuranceQuotes and Quadrant Information Services.

Meanwhile, a single comprehensive claim – which pays for damage that results from something other than a collision, such as fire or theft – results in an average premium increase of less than 2 percent.

Mike Barry, vice president of media relations for the Insurance Information Institute, said insurers know that if you file a claim after an accident for which you were at fault, you’re statistically more likely to file another claim in the future.

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“Basically, the driver who is filing a claim for an incident they caused is seen as somebody who is likely to file another claim soon thereafter,” Barry said. “And that assumption is then priced into their new rate. This means you’re now riskier and more expensive to insure.”

 

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