Incentive to Drive Carefully: the Stunningly High Price of an Accident

What's Hot

2 Types of Black Marks Might Vanish From Your Credit File SoonBorrow

6 Ways the Obamacare Overhaul Might Impact Your WalletInsurance

7 Dumb and Costly Moves Homebuyers MakeBorrow

This Free Software Brings Old Laptops Back to LifeMore

Obamacare Replacement Plan Gets ‘F’ Rating from Consumer ReportsFamily

Beware These 12 Common Money MistakesCredit & Debt

21 Restaurants Offering Free Food Right NowSaving Money

17 Ways to Have More Fun for Less MoneySave

House Hunters: Beware of These 6 Mortgage MistakesBorrow

30 Household Uses for Baby OilSave

25 Ways to Spend Less on FoodMore

Nearly Half of Heart-Related Deaths Linked to These 10 Foods and IngredientsFamily

5 Surprising Benefits of Exercising Outdoors in WinterFamily

10 Ways to Save When You’re Making Minimum WageSave

Boost Your Credit Score Fast With These 7 MovesCredit & Debt

7 Painless Ways to Pay Off Your Mortgage Years EarlierBorrow

The Most Sinful City in the U.S. Is … (Hint: It’s Not Vegas)Family

The True Cost of Bad CreditCredit & Debt

10 Companies With the Best 401(k) PlansGrow

This Scam Now Tops ID Theft as the No. 2 Consumer ComplaintFamily

6 Stores With Awesome Reward ProgramsFamily

6 Ways to Save More at Lowe’s and The Home DepotSave

6 Healthful Treats for Your DogFamily

New Study Ranks the Best States in the U.S.Family

Thousands of Millionaires Moving to 1 Country — and Leaving AnotherGrow

Strapped for College Costs? How to Get the Most From FAFSABorrow

6 Overlooked Ways to Save at Chick-fil-AFamily

Ask Stacy: What’s the Fastest Way to Pay Off My Mortgage?Borrow

Where to Sell Your Stuff for Top DollarAround The House

8 Ways to Get a Good Price on a Shiny New AutoCars

Ask Stacy: How Do I Start Over?Credit & Debt

Secret Cell Plans: Savings Verizon, AT&T, T-Mobile and Sprint Don’t Want You to Know AboutFamily

30 Awesome Things to Do in RetirementCollege

14 Super Smart Ways to Save on TravelSave

The Rich Prefer Modest Cars — Should You Join Them?Cars

You’ll Soon Pay More to Shop at CostcoSave

10 Ways to Save When Your Teen Starts DrivingFamily

Here's the penalty -- which insurance companies call an "adjustment of risk" -- you pay when you file a claim. It's not pretty.

What’s the accident “penalty” on your auto insurance?  A 44 percent increase to your premium, according to a new study conducted by For a driver with an average-priced policy (premium $841), that’s a $370 price hike.

More incentive to drive very carefully.

The average comes with a whole wheelbarrow full of presumptions. Accident penalties vary wildly by state, which we’ll get to in a minute. And the type of claim, along with the dollar amount, has a big impact, too. Not surprisingly, bodily injury claims cause the biggest increases (and the highest claim amounts); comprehensive claims, such as theft or fire, lead to the smallest increases.

The insurance industry doesn’t consider these increases a penalty, but rather an adjustment of risk. Drivers who file one claim are more likely to file another, explained Mike Barry of the Insurance Information Institute.

“Experience tells insurers that a driver who erred once is considerably more likely to do it again. This means you are now riskier to insure, and that risk is reflected in a new rate,” he told

Consumers who’ve seen their rates jump after an accident probably have their own name for the increases.

More from Bob Sullivan:

Turbulent market environment: P2P lending hits a bump in the road
Drugs, gunpowder, blow, strippers: What 20-somethings say they are buying with Venmo

Location, location, location

Where you live plays a dramatic role in how much an accident claim will raise your rates. The average increase in California is 89 percent, the study found, while in Maryland, it’s 21 percent.

The gap is explained by different rules governing rate setting; each state has its own insurance regulator that dictates how insurance companies operate. In California, for example, it’s illegal for insurers to consider credit scores when setting rates. That places extra emphasis on driving records; hence the huge accident penalty.

That’s not necessarily a bad thing; many consumer advocates object to the use of non-driving factors like credit scores to set rates.

“Things like credit-based insurance scores are not fair to consumers, but there’s nothing wrong with insurance premiums based on your driving record,” J. Robert Hunter of the Consumer Federation of America, told

Hunter says claim penalties last three to five years; after that, premiums return to their original level, assuming there’s no additional claims.

Here’s a few more factoids from the study:

Greatest increases after bodily injury claim

1. California: 89 percent
2. Massachusetts: 73 percent
3. North Carolina: 59 percent
4. Wisconsin: 58 percent
5. Iowa: 51 percent

Greatest increases after a comprehensive claim

1. South Dakota: 14 percent
2. Nebraska: 9 percent
3. Louisiana: 8 percent
4. Wisconsin: 6 percent
5. Ohio: 6 percent describes its methodology this way:

Averages are based on a 45-year-old married female driver driving sedan, employed, with a B.A. degree, excellent credit score and no lapse in coverage, who has never filed a claim and has the following limits: $100,000/$300,000 (bodily injury) / $100,000 (property damage) / $100,000/$300,000 (UI/UIM), $10,000 (PIP or Med Pay) and a $500 Comprehensive and Collision deductible. Data based on making one auto insurance claim within a 12-month period. Dollar amounts based on NAIC 2013 data, which is the most recent available.

Click here for more reporting from tech skeptic and consumer advocate Bob Sullivan.

Stacy Johnson

It's not the usual blah, blah, blah

I know... every site you visit wants you to subscribe to their newsletter. But our news and advice is actually worth reading! For 25 years, I've been making people richer without making their eyes glaze over. You'll be glad you did. I guarantee it!


Read Next: A Way to Master Income Taxes — at Last — and Save Money

Check Out Our Hottest Deals!

We're always adding new deals and coupons that'll save you big bucks. See the deals to the right and hundreds more in our Deals section.

Click here to explore 2,032 more deals!