Following a serious car accident, many people worry about the potential increase in their insurance rates. Your auto insurance costs may already be straining your budget. If you cause or contribute to a car accident or use your car insurance coverage to take care of your finances following a collision with an uninsured or underinsured driver, how much will your car insurance go up, and how will it impact you long-term?
Unfortunately, it can prove very difficult to predict how much your car insurance will increase after an accident. A variety of factors will affect the increase.
Why Do Insurance Rates Increase Following an At-Fault Collision?
Following an at-fault collision, you may feel your insurance company is punishing you by increasing your rates. You may have a strong overall driving history, but your rates rise considerably after a single accident. However, insurance companies do not raise their rates to punish drivers for accidents.
A driver who has caused an accident becomes a riskier investment than a driver who has never caused an accident. Just as insurance companies consider those potential risks when starting to insure you, the insurance company will need to reconsider the potential increase in risk after you cause an accident. For example, a younger driver may pay higher rates than an older driver due to the inherently increased risk of accidents for inexperienced drivers. Similarly, after you cause an accident, the risk of you causing further accidents may increase your rates.
How Long Do Insurance Rates Stay High After an Accident?
Most companies will increase your insurance rates between three and five years after a car accident. Some insurance companies will issue a set rate increase that will remain on your policy until the end of that period. Others, however, may offer you more leeway or provide you with strategies to lower your insurance rates after a serious accident.
Factors that May Influence Insurance Costs After an Accident
Actual insurance increases after an accident can vary dramatically. A driver with a strong driving record, few accidents or citations, and a relatively minor at-fault accident may see more minor increases in insurance than a driver who has caused accidents in the past, has a record of dangerous driving, or struggles with regular citations, for example. You may need to consult your insurance agent directly to get a better idea of how much your insurance will increase following an accident.
#1. Did you cause the accident?
Unfortunately, in many cases, if you have to use your insurance coverage, your rates will increase to go along with it. If you caused an accident, your rates may increase considerably more than if another driver’s negligence led to your car accident.
Some insurance companies have policies that note that your insurance rates may increase if you have to use your coverage for any reason, including an accident caused by another driver. In contrast, other insurers will not increase your rates if you have to use your uninsured or underinsured motorist coverage but will increase them if you use your collision or liability insurance.
#2. How much damage did the accident cause?
A minor fender bender that causes comparatively little damage will likely increase your insurance less. Some insurance companies may have policies that allow “accident forgiveness” for one relatively minor incident, as long as damages do not exceed a certain threshold. Other insurance companies may not “count” comparatively minor incidents against you.
Examine the damages caused by your accident. If your accident caused substantial property damage or severe injuries requiring considerable medical expenses, your insurance rate would likely rise more than if you caused minor property damage.
#3. What is your home state?
State insurance rates can vary dramatically. For example, Alaska, New Mexico, and Ohio may have relatively low annual insurance rates, while Washington DC, Texas, Florida, and Rhode Island may have much higher insurance costs. If you already have comparatively high-cost insurance, a percentage-based increase leads to a greater increase than in a state with relatively low insurance costs. Furthermore, states have their own policies regarding insurance costs and their limitations.
#4. What company do you have your insurance policy through?
Your particular auto insurance provider may substantially impact insurance hikes following an accident. You may need to look at your provider and policy to understand how much your insurance will increase after an accident. Some companies offer “accident forgiveness” policies, which means that your rates will not substantially increase due to one minor accident. Other companies, however, may immediately increase your insurance following an accident.
#5. Is your driving record relatively clean?
Your overall driving record, including your past accident history, can considerably impact how much your insurance will increase after an accident. If you have a history of causing accidents, you may find that your insurance increases much more than if you have not caused an accident in several years. Companies with accident forgiveness policies will usually still increase your insurance rates if you cause another accident within a set period because you become a statistically higher risk.
Your insurance company may also look at your traffic citation history. If you get tickets regularly, you may prove a greater risk to the insurance company, and your rates may increase accordingly.
#6. How old are you?
Insurance companies generally charge higher premiums for younger drivers, who have a greater overall accident risk. Collisions that involve teen drivers may also involve more substantial injuries than those involving only adult drivers since they may not know how to mitigate damage during the crash and may overreact in the moment. Once a young driver confirms that risk by causing one accident, the insurance company may increase the driver’s rates even higher.
Minimizing Insurance Increases After an Accident
An at-fault accident can cause a lot of expenses and challenges, even if you have collision insurance that will cover the damage to your vehicle. Dealing with those financial challenges can prove extremely difficult, particularly in the case of severe accidents with injuries. Fortunately, you can utilize strategies to help save on insurance costs, even after an accident.
#1. Shop around.
Generally, it is helpful to shop around for insurance regularly to see your options. An accident offers an opportunity to review insurers available to you. You may find that some providers do not emphasize your accident when calculating your costs or that some naturally have lower rates.
Keep in mind that your new insurance company will see the record of your claim and how much your insurance company paid out for it. Your accident will influence your future insurance costs, even if you change insurance providers. However, you may discover that the other insurance company still offers considerable savings.
#2. Review your policy and your coverage.
Immediately following an accident, you have a clear picture of your expenses under your current auto insurance coverage-including what your insurance policy did not cover.
- Do you need to increase your pip insurance to have more protection if you suffer injuries in a future auto accident?
- do you have adequate coverage for a rental vehicle if something happens to yours?
- do you have enough coverage to repair or replace your vehicle?
In addition, you should take a look at what coverage you likely do not need. For example, if you have another vehicle or you could get along fine for a few weeks without a personal vehicle, you may drop rental car coverage from your policy. If you discover that you have too much coverage in some area of your policy, you might want to revisit it, which could help you cut some costs. Switching insurers provides an opportunity to review your coverage and “trim the fat” to save.
You may also find that you can comfortably increase your deductible, leading to a lower overall premium. However, keep in mind that raising your deductible may mean that you have higher out-of-pocket expenses for a future accident, and make sure that you plan accordingly.
#3. Dispute liability if you did not cause the accident.
Sometimes, the other driver may claim that you caused the accident. You may, however, know that the other driver was at fault or that outside factors contributed. In some cases, an investigation of the accident may uncover that you were not the cause and that, as a result, your insurance rates should not go up. Talk to a car accident lawyer to learn whether you can reduce your liability for the accident and reduce any potential insurance increases.
#4. See what discounts your auto insurance provider offers.
Talk to your insurance provider, or potential insurance provider, about any discounts the company offers and how they can influence your costs.
For example, you may discover that your insurance provider offers:
- A good student discount
- Multi-vehicle or multi-policy discounts (for example, you may be able to bundle home and auto insurance to decrease the cost of both)
- Safe driver discounts, including using technology to track your driving habits and determine how much of a risk you realistically present based on your actual driving behaviors
Your insurance provider will let you know what discounts you qualify for and how your accident may impact those discounts in the future.
#5. Choose a replacement vehicle carefully.
If the accident totaled your vehicle, you may need to buy a new one. An expensive vehicle will likely cost more to insure than a lower-value vehicle, especially if you need full coverage or collision insurance.
Talk to your insurance provider about ratings and factors that may decrease your insurance costs. For example, in some cases, you may decrease your insurance rates by adding safety features to your vehicle.
After a car accident, dealing with increased insurance costs can substantially burden your financial well-being. Working with a car accident lawyer can help determine who caused your accident and whether you should bear the brunt of that liability and challenges that accompany an at-fault accident. Contact an experienced car accident lawyer for a free consultation and manage the impact of your car accident.