Three things that can raise your car insurance rate

And you might be surprised at how much it can go up

You get in a fender bender, and aside from the hassle of being without your vehicle while it's being repaired, you aren't that concerned. After all, you have insurance.

But wait. If you are filing a claim with your car insurance company, the fender bender is going to cost you in the long run. That's because the insurance company will raise your rate when your policy comes up for renewal.

How much the rate goes up may surprise you. The annual study by found drivers who make just one car insurance claim of at least $2,000 will see their premiums go up an average of 44.1%.

The study used a hypothetical 45 year-old married female driver with excellent credit as an example, analyzing how rates would be adjusted for three types of claims -- property damage, bodily injury, and comprehensive.

A second claim is even more expensive

If you are unfortunate enough to have to file a second claim within a year, your auto insurance rate, on average, could nearly double.

One claim is costly enough. The National Association of Insurance Commissioners (NAIC) says an average car insurance premium is $841. That means one claim that increases it 44.1% would add $371 to the bill.

Falling credit score

Unfortunately, that's not the only mishap that can raise your car insurance rates. Suppose you have a financial setback that causes you to miss some debt payments. Maybe something even goes to collections.

As your credit score falls, your car insurance rates will likely go up, unless you live in California, Hawaii, or Massachusetts, where state law forbids such a link. According to esurance, companies use credit scores to establish risk. The company defends the fairness of it, saying less-risky drivers should pay less.

Where you live

Moving to a different Zip Code may also raise your car insurance rates. According to, insurance companies look at rural areas of the country, where there is less traffic, as a generally safer place to drive.

Moving to the city, where traffic is more dense, may result in your insurance rates going up, since insurance companies think you are more likely to file a claim.

If you move to a Zip Code that happens to have a higher crime rate, your insurance company may decide you have increased your risk of your car being stolen or broken into, and raise your rates.

The take-away from all of this is the importance of maintaining a good credit score and not overpaying for a low-deductible policy that will cost you dearly if you use it.

Better to pay less each month for a high-deductible insurance policy and put the savings aside to pay for a repair if you need it.

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