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Car Accidents and Your Insurance Rates

After a car accident, many people have questions not only about whether their insurance will cover the accident but also about how an accident will affect their insurance premium rates in the future.

This question is especially important to California residents; California has long been known for having high insurance premiums, and the state consistently has some of its prominent neighborhoods rank in the top 10 for most expensive insurance rates by zip code.

A recent study analyzes the effects filing insurance claims have on future premiums. It offers insight into nationwide trends and some eye-opening information about insurance in California.

It should be noted that the researchers conducting this study made a crucial distinction between whether those filing the claim were at fault or not. If an accident is not your fault, the researchers state that your premium will likely not be affected. If, however, you were at fault, then the results of this study may apply to you.

Just a few of the noteworthy findings of this study include:

  • Making just one insurance claim of $2,000 or more causes (on average throughout the U.S.) a 41 percent increase in premiums. In California, these same claims will, on average, cause a 75 percent increase in premiums. This drastic increase is second in the nation to only Massachusetts, where the expected average increase is 76 percent.
  • Making two claims in a year causes a 93 percent jump in premiums (on average, based on nationwide statistics and rates).
  • Filing a bodily injury claim – as opposed to property damage or comprehensive claim – of $2,000 or more in California will lead to (on average) an 86 percent premium increase. This jump in price, which is the highest in the nation, is even more notable when compared to the lower end of the spectrum. If you filed the same claim in Maryland, which has the lowest average increase in premiums, you could expect a mere 22 percent increase in premiums.

Why the large jump in California premiums? California law allows insurance premium prices to be based on only three factors: years of driving experience, individual driving record (in terms of safety), and how many miles you drive each year. Due to this law, an accident-related claim can harshly impact the driver safety record criteria and lead to a steep increase in premiums.