Auto Accidents & Your Car Insurance Rates
If your driving record shows that you have been involved in auto accidents, in the eyes of the insurance company you are more likely to file claims than another driver who has no blemishes on his/her driving history. If your driving record is sufficiently bad, some insurance providers will deny you insurance coverage completely.
Luckily, such blemishes tend to lose importance over time. If your wild years in the past resulted in some accidents, making more effort to drive more carefully on the road in order to avoid such incidents in the future can pay off eventually. Most non-injury accidents stop impacting your insurance rate after a period of 3 years while injury accidents don’t impact your rate after 5 years in general.
How Accidents Can Affect Your Car Insurance Rate
Many times, motorists do not take the time to study their auto insurance policy. It’s imperative for you as a policyholder to check all the details of your insurance policy, if you do not read it keenly, you might be blindsided by punitive increases in your rates or claim rejection. Private insurance companies are normally interested in making profits and can always create coverage and claim procedures that put into account accidents scenarios and act rationally toward these events. Car insurance firms that might increase insurance rates usually need to provide comprehensive justifications as to why they’re taking those actions, or why they need to drop coverage or reject certain claims.
The following are factors that might determine how accidents on a driver’s record can affect increase in car insurance rates:
1. The At fault Driver
Normally, your insurer will increase rates if you are the at fault driver in an accident. However, the rate can stay the same if the other driver is at fault and not you. Note that there are still some exceptions that can still result in increased car insurance rates.
For instance, if you are involved in an auto accident you might receive increased rates even if you are not at fault. This is because you are statistically more likely to get involved in another road collision in the future and might pose more risk to your insurance provider.
Moreover, if you stay in a non-fault state, your insurer pays for a certain portion of the expenses and the insurance rates might go up regardless of whether you are at fault or not.
2. The Severity of the Road Accident
Damage resulting from an accident ranges from a mere scratch on the vehicle’s paint work to full crumbling of a vehicle; therefore greater damage extent has a higher likelihood of resulting in increased premiums as the insurance firm will need to pay a bigger compensation.
3. The Driver’s Value to the Insurance Company
Given that your driving record shows a lengthy history of driving safely and you have stayed with your insurance firm for a long time, you might not receive increased premium rates. On the other hand, you may get increased rates if you have a poor driving history.
4. Insurance Firm Policy
Every insurance firm has its own unique take on policies that specifies the impact on a client’s insurance rate in the event of theft, auto accident, vandalism, or any other claim type. For instance, your insurer might increase your premium rate for any type of claim regardless of its magnitude, or even if the incident was not caused by factors relating to you.
Other insurance firms might not make any adjustments on premiums if the damages were minor, it was the first accident, the collision was not the fault of the driver, or the driver possesses a good driving record.
How Much Do Insurance Rates Rise After an Accident?
Being involved in a road accident is bad enough. Drivers involved in a collision also have to worry about getting higher insurance rates for some years to come. A study done by insuranceQuotes.com validates these concerns. The study shows that drivers who file just a single claim end up having to pay an average of 41% more for auto insurance.
In their study, the researchers from insurnaceQuotes.com wanted to see how the insurance rates increased for a hypothetical female driver aged 45 years, who works and is married, and has an excellent credit score. The hypothetical driver has never experienced a lapse in her coverage and has also not filed any car insurance claims in the past.
Although she may seem like a very good client for an insurance firm, this did not stop the insurance company from raising her premium rates. The researchers studied how the female’s yearly premiums could increase after filing 3 different insurance claims namely: bodily injury, damage to property and a comprehensive claim.
Overall, the researchers found that drivers who file just one claim of at least $2,000 can expect their insurance premiums to go up by 41%. This translates to an increase of $335 for the average car insurance premium of $815 per annum. For the unlucky souls who file 2 claims in 1 year, the increase spikes to 93%.
The amount of increase in premium rates varies from one state to another. In the state of Massachusetts for example, drivers see a spike of 76% after making a single claim. On the other hand, Maryland drivers may see a rise of just 22%.
US states that have stricter insurance regulations normally have bigger rate rises after an auto accident, according to insuranceQuotes.com study. Why? A sample case is the state of California, which has a law that mandates insurance premiums to be based on just 3 factors: the driving safety history, miles driven per annum, and the driving experience. An auto accident blows one of the mentioned factors out of the water i.e. the driving safety history and the insurance companies do not have much else to factor in calculating the premium rates.
However, states like Maryland include many more factors when determining the rates including credit score rating, age, gender, and occupation.
The study also established that bodily injury claims where people are injured due to the collision are the most costly for drivers. Of course, no driver ever wants to make bodily injury claims, but the following are some states whereby you especially do not want to make a bodily injury claim of at least $2,000:
- California: Average premium increase after a bodily injury claim was 86%
- Massachusetts: 83%
- New Jersey: 69%
- North Carolina: 58%
- Minnesota: 52%
The following states showcased the lowest average increase in premium rates for a body injury claim according to the study:
- Maryland (22%)
- Michigan (25%)
- Montana (27%)
- Oklahoma (27%)
- Mississippi (28%)
On the bright side, premium increases are not permanent. In general they last for 3-5 years after which they will begin to decrease to the pre-claim amounts.
How to Reduce Your Auto Insurance Rates after an Accident
- If your insurance provider raises your premium, you can reduce the amount by simply increasing your deductible amount. Your deductible is the amount of money you pay after making a claim before your insurer pays for the remaining payments.
- Another way to reduce your premium is by dropping collision and any comprehensive coverage if you own an older vehicle.
- Given that you drive under 10,000 miles in a year, you could be eligible for a discount.
- Your insurer can reduce your premium rate if you have been their long-term client.
- Improving your driving behavior and taking a refresher driving course might also help in reducing your rates.
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