Nobody in their right mind wants to get into a car accident, that’s obvious. From broken bumpers to broken bones and everything in between, the experience of being involved in a car accident is typically not a pleasant one, no matter how minor.
But as we all know, accidents happen—and unfortunately car accidents are no exception. When the unexpected happens, your auto insurance carrier will be there to guide you from the initial claim process all the way through to the final settlement of the claim. But once the dust has settled, many customers are left wondering and worrying what having a car accident on their driving record means for their auto insurance rate...
It’s important to realize that there are many factors at play when an insurance company begins evaluating how an accident on your driving record might will affect your auto insurance rate, so each situation is bound to be unique. Despite that, understanding those factors and their influence will give you a much better idea of what you can expect in regards to your auto insurance rate after an accident.
Here are some basic facts which should help to give you a better understanding of how and why your auto insurance premium may or may not increase after a car accident:
RATES DON’T ALWAYS GO UP AFTER AN ACCIDENT ... BUT THEY CAN.
The levels of physical, social and financial seriousness can vary drastically from one car accident to another. As such, it makes sense that your insurance carrier will review and weigh several factors about you and the accident against your insurance rate. A few of the factors that an insurance company might look at in determining if and/or how your auto insurance premium might be affected are:
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Fault
Determining who was actually “at fault” for the accident is obviously an important piece of the puzzle for any insurance company. A lot of times the fault is determined as falling to some degree or another on both parties, but this is not always the case.
If you were found as either “not at fault” or as only sharing “partial fault” (usually referred to as by 0% or 50% “at fault” by insurance carriers, respectively), then it’s much more likely that your auto insurance rate will either remain the same, or be only slightly affected after the accident.
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Driving Record
During their evaluation, some insurance companies might consider your driving record as a whole, while others might only take into account the most recent few years and/or specific types of violations.
Depending on your past driving experience, one of these options might turn out to be much more beneficial to you than the other. Keep in mind that your specific insurance carrier will have the final say as to how they look at your driving record, and it will likely be non-negotiable.
In either case, suffice it to say that having a poor driving record prior to this accident obviously translates into a much higher likelihood of your auto insurance rate seeing an increase, than would a good driving record.
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Cost of Damages
Minor accidents—or what we commonly refer to as “fender benders”—are also a lot less likely to induce an increase to your current auto insurance rate. This makes sense if you think about it—at the end of the day your insurance company is a business concerned with the bottom line; if your accident costs were minimal in comparison to what they’re collecting from you, they are not going to be as inclined to view you as an increased risk to them financially.
Obviously the reverse is also true—your involvement in a major accident that costs them an arm and a leg is going to raise their concerns over an increased probability that you’ll likely be involved in another serious accident of similar financial magnitude in the future.
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Applicable Discounts
Sometimes being involved in a car accident doesn’t necessarily increase your auto insurance rate because of additional “penalties”—but instead because the accident causes you to no longer qualify for certain discounts that were previously saving you money on your current rate.
For example, your insurance company might offer what’s known as a “Claims-free” discount, meaning that your insurance base rate was being discounted by a certain percentage because you hadn’t been involved in any claims for the past ‘x’ number of policy terms. Well now that you’ve had an accident (and therefore a “claim”), your new rate would experience the loss of that discounted savings—and thus your insurance rate would technically see an increase from what you’re used to.
As you can see, at the end of the day there are a lot of variables involved with your insurance rate once you’ve been involved in an accident. Although each case is different and a lot determined by your specific insurance company, understanding how these variables come together to influence your rate will help prepare you with realistic expectations for any changes in your insurance premium.
MY RATE WENT UP AFTER AN ACCIDENT; HOW LONG WILL MY RATE STAY RAISED?
After an accident (or moving violation for that matter), your driving record will follow you for a lot longer than you’d probably like. If you saw your insurance rate take an increase due to an accident, keep in mind that the factors we just discussed to determine rate increase are the same factors insurance companies use to determine the length of time for that increase.
In a lot of cases, you can expect your accident surcharge to begin gradually decreasing for each year you go without another accident. In many states the surcharge is lowered in such a way that within 3 years of being accident free, that surcharge will have essentially disappeared from your rate altogether. To get more specific information on how long you can expect to be paying a higher rate, we recommend contacting your insurance carrier directly.
EVEN IF YOUR RATES WENT UP, YOU’VE STILL LIKELY SAVED A LOT OF MONEY.
So your involvement in an accident caused your auto insurance rate to jump... that seems like a bummer. But most people don’t realize that even though they might have to pay a little more for their insurance now, they didn’t have to pay out what they would have had to had they not had auto insurance coverage at the time of their accident.
The bottom line is that your insurance coverage likely saved you a ton of money already by helping cover all of the post-accident expenses. For example, say your insurance company paid out $10,000 for your passenger’s medical expenses from the accident; but now is requiring a rate increase of $200 a year . . . which would you rather be paying/have paid?
As you can see, having good auto insurance coverage is important. If you are involved in an accident, more often than not even an increased rate will save you huge amounts of money in comparison to having had to pay the actual costs incurred by the accident.
