Costly premium jumps tied to at-fault accident claims
Here is another reason to drive safely in Massachusetts: An accident claim can increase your annual auto insurance premium by two-thirds, the largest jump anywhere in the country, according to a new study.
Fender-benders, mailbox swipes, and serious collisions all come with a hefty price tag in Massachusetts.
A Massachusetts driver who causes an accident and makes an insurance claim of more than $2,000 can expect an average 67 percent increase in insurance premiums, a study by the online insurance shopping firm InsuranceQuotes.com shows. That single claim would raise the average premium to $1,492 from $891.
When insurance companies in Massachusetts see that the driver is responsible for the accident, said Laura Adams, a senior insurance analyst with InsuranceQuotes, “they’re really penalizing the driver.”
InsuranceQuotes based its findings on data from the top six insurance companies in each state for an average 45-year-old driver. A similar accident claim in California would boost the average premium by 62 percent, the second highest increase, followed by New Jersey, where premiums would rise by 60 percent.
Maryland drivers experience the smallest premium increases after reporting an at-fault accident, 21 percent.
In states like Massachusetts, consumers should consider whether paying out of pocket may be more cost effective than filing an insurance claim, Adams said. “If there’s a claim under $1,000, you really want to scrutinize it,” she said.
Undoubtedly, insurance companies will raise the rates on drivers responsible for a crash, said Robert Hartwig, the president and economist at Insurance Information Institute, an industry research organization. An accident and insurance claim is an indicator that the driver will get into another accident and cost insurers even more money, he said.
But what drives the wide swings nationwide in premiums after an accident is less clear, Hartwig said.
In states such as Massachusetts, California, and New Jersey, repair costs and hospital bills for people injured in accidents are probably higher, which show up in the larger premium increases, Hartwig said.
But even if drivers have an accident on their record, Hartwig said, they may be able to moderate premium increases by shopping around. “The market is competitive,” he said.
Massachusetts’ Safe Driver Insurance Plan may also push premium increases higher after an accident, said Thomas Skelly, with Deland, Gibson Insurance Associates in Wellesley and the incoming president of the Massachusetts Association of Insurance Agents. The program is aimed at encouraging safe driving by giving motorists with spotless records a discount on their premiums, which are financed by tacking surcharges on those with spotty records.
The surcharges, meanwhile, are imposed in Massachusetts even after minor accidents. A $500 claim is often enough to get hit with a surcharge.
Massachusetts does not restrict how insurers weigh a customer’s recent driving record in designing plans as long as the companies can justify their rates with reasonable financial data, said Jayda Leder-Luis, a spokeswoman for the state’s Division of Insurance.