Why You May Pay 38% More for Car Insurance
Life + Money

Why You May Pay 38% More for Car Insurance

REUTERS/Denis Balibouse

Car insurance premiums increased an average 38 percent after drivers made a single claim, according to a new report by InsuranceQuotes.com

The increase in premiums was highest in Massachusetts, where one claim boosts premiums by an average of a whopping 67 percent, followed by California (62 percent) and New Jersey (59 percent). 

“The biggest lesson for consumers is not to file a claim unless absolutely necessary,” InsuranceQuotes.com senior analyst Laura Adams said in a statement. “Making a claim for a few hundred dollars doesn’t make sense if your premium is going to skyrocket as a result.” 

Related: Why Your Insurance May Not Have You Covered

Drivers in Maryland saw the lowest post-claim increase (20 percent), followed by Alabama (22 percent) and Michigan (23 percent). The average cost of car insurance is $762 per year, according to Bankrate.com

Not surprisingly, a second claim has an even bigger impact, with premiums rising 86 percent. 

The type of claim also affects the size of the increase. Bodily injury claims are the most expensive, pushing premiums up by 42 percent; while property damage and collision claims boost premiums by 41 percent. The cheapest claims are for non-collision events such as theft, which lead to an average 2 percent increase in premiums. 

If your premiums have risen after a claim, there are steps you can take to reduce the cost of your insurance.  Consider bundling your home and auto policy with the same insurer, increasing your deductible, or switching to a pay-as-you-drive policy.

Top Reads from The Fiscal Times: