Drivers of many American-made vehicles may soon find themselves handed bigger car insurance bills due to the auto makers’ troubles.

With Chrysler and GM in bankruptcy, wheels are in motion for events that will impact insurance.

Car insurance rate hikes spring from a variety of factors, including increased costs for labor and repair parts. When one component of accident repair rises in price, insurance companies are forced to make larger claims payouts, and will later adjust rates accordingly when data show that premiums are not sufficient for increased claims.

Auto maker troubles are on track to affect those bottom lines. Here’s how it could happen.

A decline in resale value (also called residual value) for certain models, especially discontinued makes like Pontiac, will lead to more expensive insurance claims. Consider this: After an accident, a car is considered a "total loss" when the cost of repairs exceeds a certain percent of the car’s value. That threshold is often 70 percent. At that point, the insurance company gives its policyholder a check for the car’s market value and the car is hauled to the salvage yard. Total losses are among the most expensive claims for auto insurers.

A decline in market value means the threshold for "total loss" will be reached more quickly and on more cars.

Chrysler and GM used cars will likely drop in value as they become less desirable to used-car shoppers. This could hit used Pontiacs especially hard, as buyers perceive that parts and service will be hard to come by, or simply don’t want to own a discontinued brand.

A decline in market value means the threshold for "total loss" will be reached more quickly and on more cars. Suddenly auto insurers could find themselves swamped with total losses on Pontiacs and other American cars.

Once insurers see data showing a spike in total loss payments, they’ll increase rates accordingly for the drivers of affected vehicles.

Susanna Gotsch, industry analyst at CCC Information Services, which tracks auto claims data, points to the demise of Daewoo as a possible window into the future. Daewoo discontinued production in 2000.

"What we saw was that for Daewoo vehicles, the percentage of repair appraisals that were flagged total losses increase exponentially," she says.

CCC data show that from 2001 to 2008, the percentage of model year 2000 Daewoo four-door sedans deemed total losses increased from around 6 percent to around roughly 42 percent. By comparison, the industry average of total losses went from about 4 percent to 20 percent. That means twice as many Daewoos were junked than the average.

"If at the end of the day GM is not a viable company, then it’s like a Daewoo," says Gotsch.

Or look at the fates of Oldsmobile and Plymouth. CCC notes that one year after those brands were discontinued, a two-year old Oldsmobile or Plymouth had the resale value of a typical five-year old vehicle.

With those rock-bottom resale values, a spike in total losses won’t be far behind.

OEM-parts availability is an imminent problem according to Dan Young, senior vice president of insurance relations for Carstar, which has about 280 collision-repair centers in the U.S.

A disruption in the car-parts supply chain can drive up repair costs.

In March, GM announced it would give money to Tier II suppliers to keep them afloat in case Tier I suppliers fail to make payments.

On April 30, Standard & Poor's placed six North American Tier I auto suppliers on "credit watch negative" due to Chrysler's bankruptcy filing. Standard & Poor's also said "a number of smaller, Tier II suppliers could fail because of the Chrysler bankruptcy filing or the extended assembly plant shutdowns being planned by GM for the next several months, even if GM avoids a bankruptcy filing."

Gotsch says "suppliers that are providing parts for new vehicles have all slashed production. Suppliers not able to sell parts or get credit, so the supplier industry is in pretty bad straits. You may start to see some parts shortages or perceived parts shortages, which is the same in the dealership."

A disruption in the parts supply chain, including real or perceived shortages, has the potential to drive up prices for repair parts, leading to more expensive repairs and thus increased claims costs.

If claim costs for certain American-made vehicles shoot up, drivers of those vehicles will see higher rates at policy renewal time.

Insurance rate increases will be isolated to vehicles that have shown higher claim costs. Thus, drivers of vehicles not affected by parts shortages would remain immune from the insurance fray.

Young notes that even if repair costs go up, car insurance policyholders won’t pay more at the repair shop. If you have a $500 deductible on your collision coverage, you pay your $500 and insurance picks up the rest, up to your policy limits. Insurance companies initially bear the brunt of cost increases — until it’s time for you to renew your policy.

If you don’t carry collision coverage and you damage your car, you pay the full repair bill.

Rental cars can affect future insurance premiums when insurers have to pay for longer rentals if repair parts can’t be found promptly and vehicles sit idle in collision-repair shops.

If car repair takes an additional day or two, it inceases the cost of rental cars.

Take a repair on a GM car. Young of Carstar says, "If there are six GM dealers nearby, I know I can get a part that afternoon." But if the number of GM dealerships is reduced and no one nearby has the part, "then I would source from somewhere else. If it takes an additional day or two, that increases the cost of rental for the customer. It can lead to overall increased claim cost."

Chrysler wants to eliminate 789 car dealers out of about 3,200 by June 9 and GM plans to reduce its dealership count by 42 percent by the end of 2010.

Aftermarket parts could remain immune to shortages. Sarah Lewensohn of LKQ Corp., the nation’s largest supplier of aftermarket, recycled OEM and refurbished OEM auto parts, says, "We have no issues with regard to supply. The vendors we use, the manufacturers, have been able to free up capacity and can meet our orders promptly."

Insurance companies wait and see

If any of these moving gears crank out increased claims costs for the model you drive, the expected arrival time of your next insurance increase depends on your insurer’s rate-increase schedule.

For example, State Farm, the nation’s largest auto insurer, adjusts rates based on make and model only once a year and releases its new ratings around Thanksgiving. If State Farm’s data by then show bigger claims payments for certain models, drivers of those cars will see their insurance rates go up.

Allstate spokesperson Krissy Posey says, "We understand what this climate brings and we are working to be prepared. It’s a classic case of supply and demand — as parts become scarce pricing starts to increase for the short-term. However, alternative sources such as supplier companies become available to fill the void and pricing comes back in line.  We are exploring our options to fill that short-term void."