After a car accident how much will my insurance go up?
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UPDATED: Feb 8, 2019
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When a vehicle speeds past you on the highway or veers over the center line in your direction, your insurance rates flash through your mind. Many assume that your life flashes through your mind as you worry about your safety, but spikes in car insurance rates are just as worrisome for most people today. If you’re one of the millions already struggling to pay your premium on time, you know that one mistake could send your rates soaring. Start comparing car insurance rates now by using our FREE tool above!
It’s impossible to predict exactly how high your insurance rate may go after an accident because every insurance company has their own formula for determining premium prices. Rate increases also vary depending on location, so you may experience more or less of a hike due to your zip code alone. Some studies have shown that rates tend to increase by approximately 40 percent after an accident, but there are many factors that may alter that percentage for your policy.
Five Factors that May Impact Your Post-Accident Insurance Rate
Insurance companies raise rates when the amount of risk associated with the policy increases for any reason. While each company has their own formula which places more emphasis on some factors than others, there are some risk factors that are known to trigger premium hikes. If you’re involved in an accident, you can ask the following five questions to determine whether your insurance rates are likely to jump up substantially.
1. Were you at fault?
Your insurance rate is more likely to increase if you were at fault, but you may still see a small increase in price even if you weren’t at fault. The insurance company wants to spend as little money as possible on your claims, so they count every dollar expended as an increase in risk for your policy. Once you inform them that you were involved in an accident, they could determine that you’re a higher risk than previously assumed, and they will likely increase your rate even though you couldn’t prevent or avoid the accident.
What happens if you’re involved in a no-fault accident? You may file a claim with your insurance company if you have no-fault coverage, but that increases your risk of experiencing a premium hike when it’s time to renew your policy. If you have the ability to pay for the damages out of your own wallet, you may consider that a cheaper alternative.
2. Was this your first accident?
The more accidents you endure, the more your insurance company must pay out on your behalf, and the more you can expect to pay for future coverage. Even if you’re involved in multiple accidents that were not your fault, the insurance company may view you as more likely to collide and crash than other drivers. One accident may not seem like enough to consider you an unsafe driver, but you never know when the next accident will come your way.
3. Have you filed other claims in the past?
If you’ve filed claims for hail damage, car theft and other incidents that didn’t involve a collision or crash, your insurance company may factor those expenses in when determining your risk factor. If you file a lot of claims, they will consider you risky regardless of the reasons behind the claims.
4. Did your accident involve another vehicle, passengers or pedestrians?
If you’re proven at fault for an accident that involved another driver or another person’s property, your insurance company is more likely to deliver a substantial rate increase for your policy. Not only do they have to cover the damage to your vehicle and pay the medical bills for your passengers, but they also have to cover the damages sustained by others involved.
You may struggle to pay your deductible after an accident, but that figure is likely to come nowhere near the price your insurance company pays to cover all damages in the aftermath of the incident.
If it turns into a court battle with others involved in the accident, your insurance company may drop your policy altogether. Many states have laws that protect drivers from losing their insurance after a single accident, so study the laws in your state to determine your rights.
5. How severe was the damage?
The more damage sustained, the more the insurance company must pay out on your claim. There are a lot of theories about thresholds that may trigger an increase in policy rates, but there are so many factors involved that you can’t count on those theories proving correct in your case. In general, many professionals believe that a claim for less than $2,000 is unlikely to increase your rate if it’s the only claim you have filed.
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Will Accident Forgiveness Protect Your Rate?
Insurance companies are always searching for ways to attract and retain the best drivers, and accident forgiveness is one of the newest marketing strategies. The promise is that the insurance company will “forgive” your first accident, meaning they won’t increase your rate if you have an otherwise clean driving record. The terms surrounding these policies vary from one company to the next, but in most cases, this applies to your first at-fault accident.
While this type of policy may give you some peace of mind if you’re ever involved in an accident, there are some limitations of accident forgiveness that you must consider. Some insurance companies may charge you a higher rate right from the start if you want this type of protection, so it’s important to compare rates online before agreeing to a policy. Also, the insurance company can still refuse to renew your policy after you have your first accident. When you apply to other companies for a new policy, that accident isn’t forgiven and will factor into your rate.
Let’s End on a Positive Note
Determining how much your insurance rate may increase after an accident is enough to make most people want to cry, but it’s worth noting that an increase is often temporary. Insurance companies don’t want to penalize their customers forever because they have to compete with other companies to retain those customers. If your accident is followed up by years of safe, incident-free driving, you will eventually return to a lower premium. How many years it takes to get there depends on your insurance company and other factors affecting the risk level associated with your policy. Start comparing car insurance rates now by entering your zip code in our FREE tool below!