Rate Increase
An increase in insurance premiums after filing a claim or other risk factors change.
What You Need to Know
A rate increase is when your insurance company raises your premium, usually after you file a claim or your risk profile changes. This is often the hidden cost of filing insurance claims.
How Rate Increases Work:
- At-fault accidents: 20-40% increase for 3-5 years
- Comprehensive claims: 0-10% increase for 1-3 years
- Not-at-fault accidents: Often no increase
- Multiple claims: 40-60% increase or policy cancellation
Example: If your annual premium is $1,800 and you file an at-fault claim, your rate might increase to $2,340/year (+30%) for the next 3 years. That's an extra $1,620 over 3 years.
Key Point: Rate increases often cost more than the deductible you saved by filing the claim. Always calculate the total cost before deciding to file.
Sources & References
This information is sourced from authoritative government and academic institutions:
- naic.org
https://www.naic.org/consumer.htm
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