According to an annual report prepared by insuranceQuotes and Quadrant Information Services, annual premiums for motorists can spike on average by 44% after filing for just one auto insurance claim.
The same study also noted that the increases in premiums have also, on average, gone up for three consecutive years.
The report used a hypothetical 45-year-old married female driver as the basis for the auto insurance premium pricing. This model driver is employed, possesses an outstanding credit score, has no lapses in her coverage, and has filed no prior claims.
With the theoretical driver in mind, insuranceQuotes and Quadrant Information Services looked at how much her premiums would increase after filing for a bodily claim, property damage claim, or a comprehensive claim.
Additionally, the study used an experimental amount of $2,000 or more for the sample claims. The average premium increases for all the states and Washington D.C. were compared for the report.
The study found that drivers who make a single auto insurance claim of at least $2,000 will find their premiums increased by, on average, 44%. In the previous year, the average increase was at 41%.
Those filing a second claim within a year of the first experience an even higher increase to their premiums, at 98% on average.
"What's most interesting is the trend data showing that it's getting more and more expensive to file a claim," said Consumer Federation of America director J. Robert Hunter. "There are many reasons for this, like more drivers on the road and the number of accidents on the rise."
Notably, the report found that the premium increases can vary depending on the type of claim. While a single bodily injury claim will result in an average premium increase of 48%, a single comprehensive claim will lead to an average premium increase of less than 2%.
Premium increases also vary based on the state the claims were made, the report detailed.
Motorists filing an auto claim of $2,000 or more in California, for instance, experience an average annual premium increase of 78% across all three claim types—the highest increase among all the states.
On the other hand, drivers filing a $2,000-or-more claim in Maryland only see a 21% average increase in their annual premiums.
Hunter noted that the main reason why some states had significantly higher premium increases than others is due to the way those states regulate their insurance. Some states, like California, have prohibited using credit scores when determining a policyholder’s auto rates. Conversely, other states such as Maryland allow insurers to use factors such as gender, age, marital status, occupation, as well as credit score, to determine rates.
"In most states, a driver's credit score is going to gobble up most other rating factors, but in states that don't allow it you see a much greater emphasis on someone's driving record," Hunter remarked.
Hunter additionally pointed out that states that have put greater emphasis on driving records over credit scores in determining auto rates have encouraged safer driving.
Premium increases, according to Hunter, are fortunately not permanent. He remarked that drivers can anticipate their rates to remain high for three to five years following their claim, but afterward their rates should steadily decrease back to pre-claim levels—provided another claim was not filed within those years.
