How Much Does a Claim Increase My Auto Insurance?

Posted in Auto Insurance

March 16th, 2009

It is common knowledge that making an auto insurance claim will raise the cost of your auto insurance. But the exact dollar you will be charged is somewhat of a mystery. In most cases, it is up to the discretion of the insurance provider to decide how much they decide to raise your rate. There is no official standard cost, and there are several reasons why your auto insurance premium could rise.

A good percentage of auto insurance providers use a standard equation to determine your rate increase. TheInsurance Services Office’s (ISO) could raise your premium by 20%- 40% after you cause your first accident . The standard does not apply to property damage, only accidents with claims under $1000. The charge is over your base rate which is an average of the amount of paid claims plus the insurance provider’s processing fee. Some insurance companies may use your original premium as the starting point – again it is their choice how they will make your pay for the increase.

There are some insurance companies that provide qualifying drivers with a “forgiveness” clause in their policy. That clause will waive the premium increase for the the first car accident you are at fault for. These terms are specific to the insurance provider and you typically have to fit one of their profiles to qualify for the incentive.

Even if you have a flawless driving record with decades of experience behind you, being found at fault for causing an accident may cost you dearly. The exact increase amount of your premium will be unique to your circumstances and can be affected by such factors as your age, area of residence, driving record and other factors.