How Much Does a Claim Affect Car Insurance?

There are various elements that can impact car insurance premium increases following a claim, including the type of the claim, the amount of the payout, fault determination, the insurance provider, state regulations, your age, driving experience, and driving record. If you are responsible for an accident where injuries and significant damages occur, your premium can substantially increase. However, if the damages were beyond your control, minimal, and you have accident forgiveness, your renewal premium may remain unaffected or only slightly affected by the claim. Here are some important factors and considerations regarding increases in auto insurance premiums following claims:

At-fault accidents: On average, an at-fault accident claim over $2,000 can lead to a 42% increase in car insurance premiums. However, this figure may vary depending on your insurance provider and the state you reside in. For example, premium increases can range from 21.5% in Maryland to 78% in California due to different state regulations. At-fault accidents are viewed as indicators of risky driving behavior and may result in large vehicle insurance premium increases.

Comprehensive claims: Comprehensive coverage claims, which cover events beyond your control like storms, floods, and theft, typically result in a smaller average premium increase of around 3%. Comprehensive claims also contribute to claim counts and may affect premiums, especially when combined with at-fault accident claims or traffic violation tickets already on record.

Small claims and windshield repairs: Minor claims such as windshield repairs may not result in any premium increase, especially if you have a clean driving record. Every company determines what is a small claim. For example, Progressive offers Small Accident Forgiveness to their policyholders, in which they forgive any claim below $500. Usually, any claim over $2,000 is considered a large claim.

Third-party claims and fault determination: If another driver is at-fault for the accident and you file a claim with another driver’s insurance company, your premium may not be affected. However, if you claim on your own Collision coverage for an accident caused by someone else, your premium may still increase. Your insurer can try to recover the amount from the at-fault driver’s insurer. If they are successful, the claim may be removed from your policy and you may get any collision deductible you paid back.

Multiple claims and traffic violations: Having multiple claims or a combination of claims and traffic violations within a specified period can result in substantial car insurance premium increases. In some cases, insurers may refuse to offer renewal terms or provide quotes for new applicants.

Accident Forgiveness coverage: Some insurers offer Accident Forgiveness coverage, which means your automobile insurance premium may not increase after the first at-fault accident. However, this is specific to your current provider since the accident will remain on your record and will be seen by other companies and will affect alternative quotes you get from other auto insurers.

Duration of premium impact: After a claim, premiums can remain affected for three to five years, depending on the vehicle insurance company. However, if there are no additional claims or traffic violations in the following 12 months, premiums may decrease slightly.

Paying small claims out of pocket: Opting to pay for minor damages out of pocket instead of filing a claim can be a strategy to avoid car insurance premium increases and potential difficulties in obtaining insurance in the future.

Shopping around for insurance: After a claim, it is advisable to compare quotes from different insurance companies, as each provider assesses claims differently. Factors such as a good credit score may influence how much rates increase with different insurers.

While these general principles hold true, it’s important to note that specific insurance policies, state regulations, and individual circumstances can impact the exact percentage increase in auto insurance premiums following a claim. It’s always recommended to consult with your insurer or agent or obtain personalized quotes to get accurate information based on your situation.

In addition to the factors mentioned above, other elements such as age, driving history, and location can also influence the impact of claims on car insurance premiums:

  1. Age: Younger drivers, especially teenagers, are often considered inexperienced and may face higher premium increases after an at-fault accident. As drivers gain more experience and reach middle age, the impact on premiums tends to decrease. However, rates can increase again for older drivers, particularly after multiple claims or accidents.
  2. Driving history: Your driving history plays a crucial role in determining the impact of a claim on your car insurance premiums. If you have a history of prior accidents, traffic violations, or other incidents, insurers may view you as a higher-risk driver. This can result in more substantial premium increases following a claim. Conversely, if you have a clean driving record, a single incident may be seen as one off and treated leniently.
  3. Location: The location where you live and drive can also affect auto insurance premium increases after claims. Underwriters take into account factors such as population density, traffic patterns, and the frequency of accidents in a particular area. If you reside in an urban area with higher accident and claim rates, the impact of an at-fault accident on your premiums may be more significant compared to someone living in a rural area with fewer accidents.
  4. State regulations: Insurance regulations and laws vary from state to state, which can influence how much a claim affects your premiums. Some states have stricter regulations that limit the factors insurers can consider when determining rates. For example, states like California and Massachusetts have consumer protection laws that restrict the use of factors like credit scores, placing more emphasis on driving records and claims history. Understanding the regulations in your state can provide insight into how claims impact vehicle insurance premiums.

It’s important to note that while age, driving history, and location are factors in determining premium increases, they are not the sole factors. Insurance companies also consider other variables such as the type of vehicle you drive, the amount of coverage you have, and your insurance provider’s specific underwriting guidelines. To obtain the most accurate information about how a claim will impact your automobile insurance premiums based on your age, driving history, location and other factors, it’s best to reach out to your insurer or agent directly.