Driving is unpredictable, and an accident may occur if something unexpected happens on the road, such as another driver recklessly cutting you off.
Yes, car accidents can happen to anyone at any time, no matter how careful and experienced a motorist is. In addition to dealing with property damage and potential injuries, a person involved in an accident may face many financial implications, one of which may be an increase in car insurance rates.
Getting into an accident is already a stressful and frustrating situation on its own, but thinking about how much your insurance costs will go up after the crash can add another layer of stress and frustration.
An analysis of car insurance rates in the United States shows that the national average insurance cost is $2,148 per year. Given the already high rates for Americans, the prospect of a rate increase can be frightening.
if you have been involved in a car accident, it is crucial to reach out to a car accident lawyer for legal guidance and support.
Why Do Car Insurance Rates Go Up After an Accident?
Car insurance rates are not the same for all customers across the board because insurance companies calculate premiums based on risk.
Risk, in turn, is determined by looking at a variety of factors, including:
- The insurance provider
- The geographic location
- The customer’s driving experience
- The customer’s driving record
- The customer’s history of past accidents
- The customer’s claims history
Since car insurance rates are calculated based on risk, the rates tend to go up after an accident, especially if a person is responsible for causing the accident. In the eyes of the insurance company, a driver who has been in an accident is more likely to be involved in another accident.
The same rule applies to filing multiple claims within a short period. If a policyholder files a claim once, they will likely file another one. As a general rule, policyholders who are deemed a higher risk pay higher insurance rates. Insurance companies are profit-driven businesses, so this risk assessment aims to protect them from losing money.
Factors That Affect the Insurance Rate Increase
How much your car insurance goes up after an accident depends on several factors.
The three primary factors that affect the increase of your premiums are:
- Who is at fault
- The severity of the accident
- Your driving history
Let’s review each of the factors in more detail:
Who Is at Fault?
The most critical factor affecting how much your insurance premiums will increase after an accident is whether you are at fault for the accident. When a driver is at fault, they are likely to be deemed a high-risk driver by the insurance company, which will have a major impact on their insurance premiums.
If a driver is not at fault but files a claim for compensation with their own insurance provider, their insurance premiums are likely to go up, but not as much as in the case of an at-fault accident.
The accident may still significantly impact insurance rates if the insurance company cannot determine fault. Thus, if you have been in an accident and there is a dispute about fault, you should focus on proving that the other party was at fault to maximize your compensation and avoid increases in your premiums.
The Severity of the Accident
The accident’s severity also influences how much a policyholder’s insurance rates will increase. Insurance rates will likely skyrocket after more severe accidents (e.g., serious injuries or significant property damage).
The Driving History
Insurance companies also review the policyholder’s driving history when calculating their rates after an accident. If this isn’t their first time getting into an accident within a set period, their premiums are likely to increase more substantially than if they weren’t involved in accidents in the past.
In addition, if an accident results in points assigned to their driver’s license for traffic violations (e.g., driving under the influence of alcohol), the points are likely to increase the premiums. The more points a driver receives, the bigger the percentage increase.
Frequently Asked Questions (FAQs) About Car Insurance Rate Increases After an Accident
As someone who has just been in a car accident, you may have much to worry about. One of those things can be increased insurance rates. However, you may not have all the answers to your questions and may not fully understand the impact of an accident on your car insurance rates.
The FAQ section below addresses some of the questions you may have. Consider speaking with an attorney if you have other questions or need guidance with your compensation claim.
How long will an accident impact your car insurance rates?
Your past accidents will not affect how insurance companies determine your car insurance rates for the rest of your life. There is typically a limit on how long an accident will impact your insurance rates.
How far the insurer will look back into your past to determine your rates depends on many factors, including what your insurance company is, where you live, and how severe the accident is. An accident may affect a policyholder’s car insurance rates for three to five years.
Will car insurance rates go up if you are not at fault for the accident?
When you are at fault for a car accident, your insurance rates will almost certainly go up. But what if you are involved in an accident where another driver is at fault?
Even if you are not at fault, your rates may still increase if you file a claim for compensation with your own insurance provider and the provider pays out on it. However, in this case, the rate increase is not as high as it will be after an at-fault accident.
Whether or not your insurance rates will go up after an accident caused by another party depends on several factors, including how many claims, if any, you have filed with your provider within a set period.
Can your car insurance provider cancel your coverage after an accident?
Your insurance provider may cancel your coverage after an accident, though it is rare. An insurer may cancel car insurance coverage mid-term if the accident results in a DUI conviction or your driving privileges are revoked for another reason.
Can you prevent insurance rates from going up after a car accident?
It may be possible to prevent insurance rates from increasing after an accident if you have an accident forgiveness program.
While the rules of this program differ from one insurance provider to another, in most cases, the policyholder is allowed to waive the first at-fault accident from their policy to avoid surcharges. Depending on the program, a policyholder may be eligible to have one such accident waived every three to five years.
How Can You Lower Your Car Insurance Rates?
The vast majority of drivers in the United States have car insurance. As many as 12.6 percent of American motorists did not have insurance in recent years. However, despite having insurance, many drivers do not understand that there are ways to reduce the cost of their car insurance.
Some of the strategies to lower your car insurance rates include:
- Improve your credit score. Auto insurance providers in most states are permitted to consider a consumer’s credit score when determining what rates to charge. If you can improve your credit score (e.g., settling your debts and paying your bills on time), your insurance costs may decrease over time.
- Increase your deductible. Typically, the higher the deductible, the lower the premium. A deductible is a fixed amount of money a policyholder pays to their insurer out of their own pocket every time they file a claim. Thus, if you want to cut down the cost of your car insurance, consider asking the insurer to increase your deductible.
- Prove the other party’s fault. If you have been in an accident, your best bet to avoid increasing insurance premiums is to prove that the other driver was responsible for causing the accident. To do so, you will need to gather all available evidence, which may include statements from accident reconstruction experts.
- Shop around. Shopping around means comparing quotes from multiple insurance companies. Do not go to the first insurer you see online. Instead, research and compare their premiums, coverage options, and policies. Some insurers may even offer discounts.
- Change your coverages. Depending on your state, you may legally have to purchase and maintain a certain level of bodily injury and property damage coverage. However, many of the coverage options offered by insurers are optional, which means you can opt out of the coverages you do not need. You might want to review your policy with an experienced attorney to ensure that your policy meets your specific needs and you do not pay for unnecessary coverages.
- Consider a different vehicle. The make and model of the policyholder’s vehicle is one of the many factors insurance companies consider when calculating premiums. If your goal is to lower the money you pay on car insurance, consider getting a vehicle that costs less to insure.
Insurance companies are not always transparent about the formulas they use when determining premiums for policyholders. However, the above-mentioned strategies may be a good place to start if you want to cut your car insurance costs.
Recovering Financially After a Car Accident
A car accident can put immense strain on your finances. Your vehicle may have property damage or be a total loss, which results in repair or replacement costs. You may also be left with physical injuries that require expensive medical treatment and prevent you from working.
Fortunately, there are things you can do to improve your financial standing and save you from drowning in debt:
- Negotiate your medical bills with the provider. Many healthcare providers allow patients to negotiate medical bills. This may reduce your medical expenses and give you some financial relief.
- Review your insurance policy. Often, people underestimate how much their insurance may cover when an accident occurs. Depending on your coverage, you may be entitled to compensation for car repairs or replacement, medical expenses, loss of income, and many more. Have your attorney review your policy to have a better understanding of what coverage you have.
- Seek compensation. There are two ways to pursue compensation for the losses you have sustained after a car accident: file an insurance claim or file a lawsuit against the at-fault party. Which route to take depends on many factors, including the state where you live, who is at fault for the accident, whether you or the at-fault driver has sufficient insurance coverage, and other factors.
- Hire a car accident attorney. After a car accident, always hire an attorney to navigate the claims process. Your attorney will pursue the compensation you are entitled to and communicate with the insurance company to ensure you do not face wrongful blame.
A personal injury attorney can navigate the aftermath of a car accident more effectively and explain how your insurance rates may increase in your particular case. If you have concerns about your insurance premiums going up after an accident, your attorney will help show when someone else was responsible, which should have no effect on your rates.