Being involved in a car accident can certainly affect your car insurance, but not in every case. The outcome will depend upon a number of factors. Here’s a rundown of what insurance companies consider when adjusting your car insurance after an accident, and what you can do to lower your premiums.
Why are insurance rates raised after an accident?
It may feel like a punishment or penalty on top of an already stressful experience, but that’s not the intention. Insurance companies are always adjusting their rates based on new risk assessments in light of new data, like if you move to an area with a higher crime rate, for example. If the accident leaves them of the opinion that you are a riskier driver than you were before, then they will increase your premium accordingly.
But it’s not quite that cut-and-dried. Factors for their consideration include:
Who’s at fault
If the accident in question was your fault, it’s more likely that it will affect your premiums, as they will have no choice but to deem you as a riskier driver than previously assessed.
If the accident wasn’t your fault, there is a reasonable chance that your premiums won’t be affected, but not in every case. So long as the at-fault party holds valid insurance, they should cover the cost of your repairs, but, depending upon how many accidents you’ve been involved in, your own provider may still review your rates.
When the at-fault party’s insurance is not sufficient to cover your repair bills, you could fall back on the uninsured motorist portion of your own coverage. In this case, however, it may be that your provider will choose to increase your rates.
The size of the claim
Whether the accident was your fault or not, any increases in premiums will factor in the size of the claim that you lodge.
The amount of a claim can vary significantly. For example, if you ding a post and only need relatively minor repairs to your own car only, then the payout will be relatively small. However, if the accident is serious, affecting multiple cars and causing bodily injuries, the claim could be significant enough to warrant a premium hike no matter who’s at fault.
Your driving record
Not only will the details surrounding the current accident be considered, but your insurance provider will also assess the outcome based upon your driving record. If you have been involved in multiple accidents in recent years, you are much more likely to see a rate rise.
This also includes other traffic violations such as speeding and running red lights to further assess your overall driver risk.
Assessing the circumstances of the latest accident will also go beyond whether you are at fault. If you caused the accident as a result of driving under the influence of drugs or alcohol, you could face even higher premiums, or a refusal to insure you at all.
How long will an accident remain on your record?
The length of time that an accident will remain on your record differs between states, but the average is between three and five years. If you are involved in a reckless driving incident or a DUI, it’s likely to remain on your record for ten years.
You can check with your state’s DMV website for specific information regarding driving record requirements in your state.
Accident forgiveness programs
Some insurance providers offer an accident forgiveness program for long-term customers. If you are enrolled in such a program, you may be eligible to have any premium increase waived.
The guidelines for these programs vary between providers, but most agree to waive any claim surcharges for the first at-fault accident claim that you make, and limit it to one waiver within an agreed timeframe, such as five years.
Accident forgiveness programs do typically come at a cost, however, as enrolling in them will increase your premiums slightly to begin with. Some companies offer them for free to long-term customers. Companies that offer different forms of accident forgiveness programs include Geico, State Farm, Progressive, Allstate, and Nationwide.
How can you reduce your premiums?
If you find your premiums have been increased following an accident claim, there are some ways that you can potentially bring them down. These include:
- Shopping around – Unless you regularly shop around for the best deals on insurance, there’s a good chance that another insurance provider could beat your current rate, so it’s well worth investing an hour or two to call around.
- Reassess your level of coverage – check your policy inclusions for any corners you are comfortable cutting. For example, you may decide to cancel your windshield cover or the additional rental car coverage you originally opted for. You can also increase your deductible amount, but be sure that you aren’t effectively voiding your own coverage by making a future claim completely unaffordable.
- Change your vehicle – Cars that are less valuable and less powerful are cheaper to insure. If you have exhausted all other options, it may be time to consider downgrading, at least in the short term.
Not all accidents result in a rate hike, but when they do, there are some things you can do to minimize the impact. Reassessing your level of coverage, shopping around, and even swapping your car for a cheaper one to insure can go a long way to getting you through until your premiums become more affordable again.