How Much Does Insurance Go Up After an Accident?

You got in an accident. You filed a claim and now you’re afraid to get your next car insurance bill. You’ve probably heard some horror stories, with rates rising hundreds of dollars for multiple terms. Before you panic, here’s what you need to know.

Who’s At-Fault?

This is the first question to consider. Were the police involved? Did they determine that you’re at partial or full fault for the accident? Car insurance providers take police reports and witness reports into consideration when determining who is culpable and that can change the outcome of your premium.

Be aware that auto insurance carriers will not necessarily hold the same interpretation of fault as the police report. In some cases, they may determine that you were at partial fault as a driver even if the police cleared you.

Typically, if you are found fault free by your carrier, your premium rate won’t change at all. It seems obvious that it shouldn’t, as if you’re 100% innocent, how can you be charged with a rate increase? You weren’t responsible. However, you may find that in some cases, even if your car insurance carrier decides that the other driver involved is completely to blame, your rate increases. Why? It all comes down to risk. If your location is considered riskier now that you’ve been in an accident then your car insurance company may decide to have you compensate for that.

Is This Accident Part of a Trend?

graph up and to the rightAn important factor related to risk is trends. Was this accident a singular event or part of a recent cluster of collisions? Even if your driving record has been clean for several years, a recent trend of accidents will likely cause your premium to rise. It’s frustrating – we know – especially if you’re not at-fault or the collisions seem to be the result of cruel coincidence.

Still, in general, a trend is a trend. One accident may raise your premium 20%, but another one on top of that, can hike your premium up 50%. Always try to drive cautiously, but after an accident, you should be extremely careful so that your rate does not stay high for long.

How Serious Was the Accident?

Severity has an impact. The difference between a totaled car and a fender bender is sizeable, not to mention the injuries caused to you or the other driver. The extent of total damages influences your premium, but if you’re not at-fault and the other driver’s insurance covers you, then the impact will be minimized. 

Most auto insurers have a threshold limit for damage expenses that once surpassed, automatically increases your premium. The treatment of accidents can also vary significantly from state to state.

Don’t forget to consider whether it’s even worth it for you to file a claim. In some cases, it’s a must, but if the damages are less than your deductible, then you may want to pay for them out of pocket to avoid a rate increase. Just make sure all of your bases are covered when dealing with a stranger. Often, it’s important that both of you sign a document listing out damages so that you don’t find yourself in a more complicated situation. Furthermore, if the accident only involved you, and no collision with another vehicle, then you may find it’s worth it to pay for the expenses privately. 

Remember, your car insurance premium is based on several factors. In general, one single accident should not raise your rates exceptionally. However, you may want to look into whether your policy includes accident forgiveness. Perhaps, that’s something you can add on to prepare for the future.

There is no magic number. As you know, your individual car insurance rate is based on many factors so premium increases vary considerably after accidents. Depending on whether or not your state has a no-fault law, which means each driver’s car insurance must pay a portion of costs regardless of fault, then your premium will almost surely increase. Typically, a rate rise can last anywhere from 2-5 years so it is worth asking about a timeline when you file a claim. If you’re still unhappy with your rate, you can always try shopping around.

Accidents happen. Don’t beat yourself up over them. Just be sure you have insurance. The best thing you can do is be aware and prepared.

Photo Credits (top image): John, Tony Alter, Rian Castillo (in-line): AJC

Category: Auto Insurance

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