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Data Dive: When will you get gouged by your car insurance company?
March 9, 2017 / 6:40 PM / 8 months ago

Data Dive: When will you get gouged by your car insurance company?

There’s a popular myth that filing a car insurance claim makes your rate go up. But that’s not always the case.  

insurance

Drivers who make a single claim of more than $2,000 in a year will see rates go up 44 percent, according to a new study from InsuranceQuotes.com. That's 6 percentage points more than three years ago. Filing a second claim in one year makes rates jump an average of 99.4 percent, up 13 points from 2014.

But those numbers don’t tell the whole story

The good news is that when you file a claim for damage that is not your fault, your rate may not go up at all, or the rise will be a negligible average of less than 2 percent.

So consumers will actually be making a good financial move to make a claim to fix a dent from a falling tree limb instead of paying out of pocket, says Laura Adams, senior insurance analyst at InsuranceQuotes.com.

Ultimately, rate increases come down to what risk pool you are in. If you have a freak accident that is not your fault, the insurance company will not automatically put you in a higher risk pool, Adams explains. But if the accident is your fault, you are statistically at higher risk to have more accidents. So the insurance company jacks up your rate.

The kind of claims that causes the biggest spikes in premiums are for bodily injury to others. These have an average payout of $17,024 versus $3,493 for the average damage claim. Have one of these and the average rate hike is 48.6 percent nationally, with some states having major spikes, like California, where it jumps rates 73 percent.

Knowing what's behind the data, your overall goal as a consumer should be to stay below the radar of your insurance company. That means if you get a speeding ticket, be proactive about your driving record and take a class. Another strategy is to regularly shop for a new policy and immediately do so if you face a rate hike. You may be more attractive to another company as a new customer, or they may have a different algorithm to assign risk, and snagging an introductory offer could lower your monthly costs.

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