Car Insurance Rates After an Accident
Know the factors that influence insurance rates if you've had a car crash
You hear the screech of tires. Everything moves in slow motion. You can't believe what's happening. You've been in a car accident.
You're not alone. More than 5.6 million car crashes were reported to police in 2012. The causes are varied: severe weather, distracted driving, and drinking are among them. The cost of injuries, property damage and related factors is significant, totaling an estimated $277 billion.
After the initial shock of being involved in a car accident wears off, you may wonder how making a claim will affect your car insurance rates. The answer is that several factors are involved. Those factors vary based on your insurance company's practices and the state in which you live. Take a look at some of the factors that play a role:
Who was at fault?
If you are found to be at fault for the car crash, it is likely your car insurance premium will increase at your next renewal. The amount varies based on the state in which you live and your insurance company, but in some cases base rates may increase by as much as 40 percent. This surcharge may remain on your policy for three years.
In most states, laws protect drivers who are not at fault from auto insurance rate hikes. However, if you have been involved in more than one car crash and have not been found at fault for any of them, rates may still go up because you are considered to be more apt to get into an accident.
How bad was the accident?
Practices vary depending upon the insurance company, but in general, "an insurer will increase your premium by specific percentages for each chargeable claim made against your policy above a specific dollar amount," according to the Insurance Information Institute. These charges are based on damages incurred by the driver at fault and any other parties involved in the car accident. Claims vary from minimal damage in a ‘fender bender' to serious auto damage and medical injuries.
Can accidents lead to non-renewal?
An auto insurance company may choose not to renew a policy following an accident. Non-renewals are often based on the insured's driving record. While the definition of a poor driving record varies by insurance company, a person with several accidents on his or her driving record may expect to face a non-renewal. The one variable nearly all insurance companies agree upon is dropping coverage for a driver who causes an accident while under the influence of drugs or alcohol.
The risks of not making a claim
Drivers who do not want their car insurance rates to increase may consider not making a claim after a car crash, especially if damage is minimal and there are no other vehicles involved. There is a risk if you don't report an accident when another driver is involved. The other driver may decide much later to sue for damages or medical injuries. Without a claim or police report, gathering evidence will be delayed, if not impossible. Some insurance companies may choose not to honor the claim at all.
Many insurance companies provide discounts on auto insurance policies for safe driving or remaining accident free. Those involved in car accidents may lose one or more discounts, no matter who is at fault. While losing discounts technically is not considered an increase to a car insurance rate, the result often appears the same since the insurance premium you pay is higher.
Some insurance companies (including Ameriprise Auto & Home Insurance) have a benefit called accident forgiveness. By offering this feature, the insurance company agrees not to surcharge an at-fault accident if it is the insured policyholder's first one. In this case, rates are often held steady for those who have a clean driving record and have been with the insurance company for a certain length of time. It's important to note, however, that while a first accident may be forgiven, if the insured has a second accident, the insurance company may count the first accident in addition to the second car crash when determining rates.
If you've had a car accident and you do not qualify for accident forgiveness, it may be a good time to get a free online insurance quote. By doing so, you can compare insurance rates to help keep your insurance affordable.