After a single auto insurance claim of $2,000 or more, drivers can expect their premiums to rise by two-fifths, according to a study by insuranceQuotes.com, an insurance aggregator and consumer information company.
According to the results of the annual survey, the national average premium increase of 41 percent is three percentage points higher than last year’s average of 38 percent. Drivers who make a second claim pay 93 percent more than a driver with no claims.
The study based its findings on a hypothetical 45-year-old married, employed female driver with an excellent credit score, no lapse in coverage and has no prior auto claims. For each state and Washington, D.C., insuranceQuotes.com tracked how much premiums rise for the example driver after filing a bodily injury, property damage and comprehensive claim.
"Many consumers underestimate the consequences of making claims because they can affect your rate for years," said Laura Adams, a senior analyst at insuranceQuotes.com. "If you get a premium hike for making a small claim, that could hurt your finances over the long run."
Premium increases vary on a state-by-state basis. Insureds in Massachusetts endured the largest jump: Just one claim leads to an average premium increase of 76 percent, up from 67 percent in 2014.
The next-most expensive states were California, with a 75 percent increase; and New Jersey, with a 62 percent increase. Maryland had the lowest post-claim increase, at 22 percent; followed by Michigan, 23 percent; and Montana, 25 percent.
The main reason certain states show more significant premium increases than others is regulation, according to Doug Heller, an independent consumer advocate with the Consumer Federation of America. Massachusetts and California have "the most prohibitive insurance regulations in the country," Heller said, when it comes to using socioeconomic factors, such as credit scores and occupations, to set auto insurance premiums.
For example, California voters passed Proposition 103 in 1988, which significantly limited the factors insurance companies could use when determining auto rates and banned using credit scores. In Massachusetts, insurers are not allowed to consider non-driving-related factors, such as gender, marital status, age, occupation, income or education when determining annual premiums.
Other factors that affect rates include the type of claim. Bodily injury and property damage claims, including collisions, are the most expensive with 45 percent increases for bodily and 41 percent increases for property damage, respectively. Comprehensive claims for non-collision events, such as theft, were found to be the least expensive with 2 increases on average.
States with the greatest average premium increases resulting from one bodily injury claim of $2,000 or more:
1. California: 86 percent
2. Massachusetts: 83 percent
3. New Jersey: 69 percent
4. North Carolina: 58 percent
5. Minnesota: 52 percent
Comprehensive claims, which pay for damages resulting from something other than a collision, such as fire or theft, resulted in the least significant premium increases, according to the study. The average cost of a comprehensive claim in 2013 was $1,621, according to Barry, and the national average premium increase after filing one comprehensive claim of $2,000 or more is about 2 percent.
"Comprehensive claims barely move the needle because they're the result of something beyond the driver's control," Heller says. "So it really doesn't tell an insurer anything about the future likelihood of filing another claim."
