Claims Increase the Cost of Insurance

By: William Forbes

In last week's blog, I shared a story from Crain's Chicago Business, which said State Farm has just reported its worst year ever in terms of claims reported and the amount of money it lost insuring cars. The article hit on a number of trends insurance agents are seeing across the industry - distracted driving is leading to increased claims, and the increased claims are driving the price of insurance up for all of us. Even those of us who do not report claims are feeling the effects, as insurers raise rates for everyone in an effort to maintain profitability.

And, now, on the heels of that article, NBC News 10 recently published findings from an annual study conducted by insuranceQuotes that indicates people pay more for insurance after reporting a single claim. The article says specifically, "drivers now pay an average of 44 percent more for car insurance after making a single claim of $2,000 or more." Reporting a second claim is even more costly.

I'm not writing about these articles to scare people away from reporting claims. There are times when insurance claims are necessary, and in those cases, that's why you pay for insurance. The point I would like to make, however, is that you should really have a detailed discussion with your agent before you report a claim. Having a conversation with your agent is an important part of managing your finances. The fact is, reporting claims will result in higher insurance premiums, and possible surcharges.

More broadly, the increase in claims across our state have caused insurance premiums to go up for everyone. Even if you don't report claims, your bill is being affected by these industry trends. That's why it's so important for us, as a community, to put an end to distracted, aggressive, and unsafe driving.

Check out the NBC article here: http://turnto10.com/i-team/consumer-advocate/study-looks-at-impact-of-claims-on-car-insurance-rates