Did you ever dent your car skidding over a curb during a snowfall and choose to pay for the damage out of pocket rather than risk increasing your auto insurance premium?
What about accepting the dented bumper because you don’t want to overheat your credit card, in addition to wanting to keep your insurance rates down?
If that sounds like you, well, maybe you’ve done the right thing after all.
A new study shows that drivers nationwide pay an average of 38% more for car insurance after making just a single claim. Michigan showed an average increase of nearly 23%, the third lowest increase in the country, according to the report by InsuranceQuotes.com.
The steepest hike would be in Massachusetts, where one claim can lead to an average premium increase of 67%. California was up an average 62%; and New Jersey was up an average 59% after one claim, according to the study.
The study noted that the average annual premium in Michigan, based on data from the National Association of Insurance Commissioners, is $935. But after making one claim of $2,000 or more, the study showed that the average premium would be $1,147, up 22.7%.
Laura Adams, a senior analyst for InsuranceQuotes.com, based near San Francisco, said consumers should not file small claims on their auto insurance, in general, unless absolutely necessary.
How much a premium could go up, she said, would vary significantly from policy to policy. And she noted that extra cost could hit policies for not just for one year, but maybe for three years to five years down the road, as well.
No surprise, perhaps, but making a second claim within a 12-month period will ding your finances even more. A driver with two claims pays nearly twice as much for car insurance as a claim-free driver, according to the study.
Some consumers could have even more reason to avoid filing a claim — if a car owner already made a claim recently, or maybe fears that a teen driver on the policy could cause more damage to a car in a few months.
Lori Conarton, a spokeswoman for the Lansing-based trade group the Insurance Institute of Michigan, said insurance is complicated so the disparity in the impact of claims by state varies due to regulations, and the nature and severity of the claim.
"Michigan’s high mandated auto insurance benefits cause Michigan’s auto insurance premiums to be costly, so it is good news that the impact of claims in Michigan is lower than other states," Conarton said.
She said insurance premiums can increase after a loss because filing one claim makes a consumer more likely to file another one in the future. As a result, a consumer is viewed as a more risky and expensive customer to insure.
So what do you do in the winter?
"If people jump a curb due to winter weather and damage their vehicle, they first need to calculate how much it will cost to have the car repaired and take into consideration the amount of their deductible," Conarton said.
If you have a $500 deductible and you have $550 in repairs, it’s very likely not worth it.
"It is really a math calculation to determine whether they should file the claim or pay the damage themselves," she said.
Contact Susan Tompor: 313-222-8876 or stompor@freepress.com
Source: Freep.com
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