Every day throughout the United States, vehicle accidents occur. These accidents range in severity, but all of them can lead to various damages and injuries. In fact, they can even lead to fatalities. As a result, the aftermath of an accident can be extremely difficult, and victims often have to recover physically, mentally, emotionally, and financially.
Often, victims’ primary concern is recovering compensation for their financial losses, but another key element to consider is what happens to car insurance rates after an accident. If you did not cause an accident, your rates will probably not increase – but they might.
That said, opposing insurance companies and legal defense teams will work hard to prove their insured is not at fault, potentially leading your insurance company to point the finger at you. For this reason, you must be ready to provide evidence that the other party was liable to avoid or minimize a rate increase.
Insurance rates going up after a car accident is a part of life, but there are several factors everyone should consider in case of a car accident. Just as each car accident has its unique circumstances, each auto insurance company has its own rules regarding rate increases. Being familiar with the specifics can prepare drivers for what to expect regarding their car insurance rates.
As a driver and insurance customer, you have rights. If you believe that your insurance company has unfairly raised your rates or mistakenly assigned you fault after an accident, you should speak to a car accident lawyer immediately. An attorney can review your case, determine who was at fault for your accident, and ensure that your insurance company abides by your policy and state regulations.
Will an Accident Increase My Insurance Premium?
After an accident that was your fault, you are likely to experience insurance rate increases. In fact, your rates may go up even if the accident was not your fault, but not as much. Premium increases occur because once a driver causes an accident, insurers view the driver as more of a risk to insure, and they increase their rates accordingly.
The amount that a driver’s monthly premium will increase after an accident depends on:
- driver’s driving record
- their auto insurance provider
- their claim history
Some insurers use a driver’s age and gender to determine insurance premium rates. Because of this, the highest increases after an accident are applied to young drivers because they are especially risky to insure, according to most insurance companies. In addition, the more accidents and traffic tickets a driver accrues, the more rates are likely to increase.
A liable driver’s average coverage premium increase is often significant after an accident. However, the most drastic rate increases occur for drivers who were impaired by drugs or alcohol or who caused extensive damage or severe injuries. Sometimes, the driver’s insurer may even refuse to renew their policy.
Sometimes drivers who are not at fault may also experience increased premiums. For example, a driver not at fault may experience increased premiums if they must claim against their uninsured or underinsured motorist policy.
Using this coverage means the driver’s insurance company pays to cover medical expenses and property damage for their insured when the at-fault driver has no or inadequate insurance coverage. Making a claim can minimally increase your insurance rates if you are not at fault for the accident, if at all. In either case, the best way to understand how a driver’s premium will be affected is to consult their insurance representative.
How Do These Factors Affect Auto Insurance Premiums?
Policy and Deductibles
The specifics of choosing a coverage plan and deductible play a role in your monthly payment. Generally, a higher deductible means a lower monthly payment, and a lower deductible means a higher monthly payment. After this, additional coverage gives the driver more insurance protection and increases the monthly cost.
The Type of Car
Often, auto insurance providers will develop safety ratings by collecting data from customer claims. In addition to safety reports, this data shows which cars are safer to drive. Because of this, insurers may offer discounts to people who drive safer cars. Contrastingly, some insurers increase premiums for customers whose cars are more likely to be damaged and lower rates for customers whose cars are more durable. Researching a vehicle’s safety rating can be beneficial in striving for a lower insurance premium.
The Amount and Distance the Car Is Driven
People who drive their car for business or their occupation tend to drive more miles annually and end up paying more for insurance coverage than those who drive less each year. Consider joining a carpool or vanpool, riding a bike, or taking public transportation to the different points of interest. Insurance rates may be lower if the car spends more time parked.
Driver’s Place of Residence
Drivers in bigger cities tend to pay higher insurance premiums than those in smaller towns and rural areas. These drivers see lower insurance rates because of higher theft, vandalism, and collisions in larger town areas.
Driving Record
Drivers who have caused accidents tend to pay higher premiums than those who have gone accident-free for consecutive years. For example, a driver may qualify for State Farm accident-free savings if they have been without an accident for three years. Even with accidents and tickets on a driving record, the potency of these marks tends to wane the more accident-free time that passes.
Credit History
An insurance company may use a driver’s credit history to assess their level of risk. Many companies may use credit history to determine the cost of auto insurance, but only where the driver’s credit history is relative to the policy. Maintaining good credit can have a beneficial impact on the cost of premium rates.
Age, Sex, and Marital Status
For drivers under 25, premium rates are usually higher, particularly for single males. Many insurance companies offer discounts to students, especially those with high grade-point averages.
Why Insurance Rates Increase After an Accident
Insurance companies base car insurance rates on statistics, and drivers are more likely to have an accident if they have already been in one. As such, the premium increase reflects the higher risk the insurance company takes by insuring the driver. Any claim can impact a driver’s premium, notably if they have multiple claims in the past. Fortunately, the rate may decrease after a few years without the driver filing more claims.
Preventing Premium Increases With Accident Forgiveness
Sometimes drivers involved in accidents can enroll in accident forgiveness programs, and they may become eligible to have their claim surcharge waived. Guidelines for these programs vary from state to state and from company to company, but most accident forgiveness programs waive the first at-fault loss that occurs on the policy. Depending on the insurance policy, each driver gets one accident removed from their record.
An accident forgiveness program is typically an optional endorsement and will add cost to the driver’s policy. If a driver has been with the same company for several years, they may qualify for free accident forgiveness coverage.
What Is Accident Forgiveness
Accident forgiveness is an additional coverage option for which a driver may qualify and add to their car insurance policy. Accident forgiveness prevents a driver’s insurance premium rate from increasing after their first accident.
Those Eligible for Accident Forgiveness
Drivers become eligible for accident forgiveness through most insurance companies if they have a driving record of five years of a clean policy.
A clean driving record includes:
- Drivers 25 or younger must obtain five consecutive clean policy years before their first accident
- No accidents in five years
- No traffic or moving violations in the last five years
Benefits of Accident Forgiveness
- The driver’s premium rate will not increase after their first accident.
- A static car insurance premium may bring long-term financial benefits.
Lowering Your Premium After an Accident
If your rates go up after an accident, you can lower your costs.
Increase Your Deductible
The higher your collision and comprehensive coverage deductible, the lower your premium. Raising a deductible is a viable option, but it is essential to remember that out-of-pocket expenses increase upon filing a claim.
Improving Your Credit
In some states, drivers have a credit-based insurance score, which plays a role in determining their overall car insurance rate. Staying within a spending budget and fixing any outstanding balances help to improve your credit score and lower your premiums.
Shopping Around
To ensure you get the best rates, it is a good idea to compare quotes from different auto insurance companies.
Finding Discounts
Many auto insurance companies offer a range of discounts, including student discounts and multi-policy discounts. Some agencies even offer award discounts for safe driving.
Take a Driver’s Education Course
Accident prevention or defensive driving courses can help drop a driver’s premium. Contact your insurance company to see if taking a course can lower your payments.
Purchase a Different Car
It costs more to insure a more expensive vehicle, as the make and model of each vehicle are rated differently. Trading in your current vehicle for a cheaper one may be good for your budget.
What if I Did Not Cause the Accident?
As mentioned above, your rates may go up even if you were not at fault for an accident.
That said, in some situations they may not increase:
- Your car was legally parked when the accident occurred
- Another driver rear-ended you, and the police did not issue you a citation in relation to the accident
- Your accident involved an Act of God, such as a collision with an animal or a falling object
Documents Needed to Prove You Were Not at Fault
There are certain documents that you can provide to your insurance company to establish the fact that you were not at fault.
These include:
- A police report about the accident
- Documentation showing that you obtained reimbursement from the other driver’s insurance
- Another driver’s written statement attesting to fault
- A statement from the other driver’s insurer accepting fault on behalf of their insured
Questions to Ask the Auto Insurer When Applying for Insurance
One way to avoid increases in your insurance rates is to understand your policy inside and out. While you may not avoid accidents that other drivers cause, the more you know about your policy, the more steps you can take to prevent increases – or at least know what you’re getting into so you can plan.
Some questions you should ask an insurance company before signing up:
- How long do accidents stay on insurance?
- Do speeding tickets affect auto insurance, and if so, how much?
- How much can bundle auto, home, and life insurance coverages save?
- Can the premium rate be lowered by raising your credit score?
- How often will the premium rate be recalculated?
If Your Premiums Go up, You Can Switch New Providers
Following an accident, a driver may find that switching auto insurers will be a viable option rather than paying a higher premium. The driver can do so if they can find an agency willing to work with them. Additionally, a driver can cancel their insurance after an accident. In doing so, it is crucial to remember that the insurer is unlikely to do this unless the driver had past infractions or the accident was due to the driver being intoxicated or recklessly driving.
Contact a Car Accident Attorney Today
A car accident can be traumatizing, bringing about significant physical, mental, emotional, and financial stress. The recovery process for all four of these issues is unique for each individual, but it invariably requires a lawyer to sort out.
If you suffered injuries in an accident or are have trouble dealing with the insurance company, contact an attorney immediately. A personal injury lawyer familiar with car accident law and insurance coverage in your area can protect your rights and make sure that the insurance company treats you fairly.
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