The hidden costs of filling that insurance claim

Think twice before filing an insurance claim over that fender-bender or other minor damage. It could cost you big time.

One $2,000 property damage claim is enough to hike your auto insurance rate at renewal by an average 41 percent, according to new data from InsuranceQuotes.com. A typical consumer would pay $1,250.50 per year, they say, instead of $814.99.

Bodily injury claims tend to be even more expensive, raising rates by an average 45 percent. There’s also some variation depending on the state you live in, based on varying insurance regulations.

Price jumps stem from insurers’ perception of you as an increased risk. Statistically, if you file a claim, you’re more likely to file a second or third claim. If one claim is expensive, a second is exorbitant, spiking rates by an average 93 percent. Increased rates typically stay in effect for two to three years, she said, provided you don’t have any more accidents.

Not all claims trigger big price hikes. Comprehensive claims—which include damage to your car from vandalism, animals and natural disasters—generate a small increase of 2 percent on average. Often, that’s because such incidents are out of the driver’s control. If a tree falls on your car, yes, that’s what your insurance is for. Those kinds of claims move the needle very, very little.

The lesson for drivers: Use insurance as intended, to cover significant losses only. “Think of your policy as something to pay a cost that you would not normally be able to pay out of pocket.

Raising your deductible is one strategy that can help reduce the chances of filing a small-ticket claim while also saving you money.

Even just increasing it from $200 to $500 can reduce premium costs by 15 to 30 percent, according to the insurance institute. The flip side of that is, you’re taking on more of the risk. Don’t raise the deductible to more than you can afford to pay in an emergency.