On average, after an at-fault accident, your car insurance can go up 26 percent to 32 percent. You may pay around $300 to $500 extra a year.
In the United States, car accidents are highly common. On average, a collision occurs every 60 seconds. From minor fender benders to severe crashes, each accident can affect your car insurance.
If the car accident is your fault, the insurance company usually has to pay up. To minimize future risks, it will increase your premium. The amount depends on many factors. Let’s take a closer look at how your insurance payments can change after an accident.
Factors That Affect the Insurance Increase
If the other party proves your fault in an accident, you can expect the insurance to go up.
The amount depends on:
- Type of accident – severe accidents usually lead to higher insurance payouts. So a fender bender will cause a slight increase while a big crash could bump the premium by as much as 40 percent.
- Prior violations – if you’ve caused accidents before, the insurance company is likely to consider you a risky customer, thus making your premium even higher.
- Your location – different states have different insurance requirements. The premium increase can depend on the state you live in.
- Insurance company – each insurance company has its own approach to increasing premiums. You can learn about their tactics when buying insurance.
- Age – young drivers are often considered high-risk customers. So when they get into an accident, the premium can go up significantly.
Each factor affects the insurance premium differently. In some cases, the premium can go up by 2 percent while, in others, it can increase by 40 percent or even more. Speak to your insurance company’s representative to find out what to expect from a surcharge.
Keep in mind that the fault for some accidents can be shared among the participants. If this happens, your insurance company may not have to cover all the damages. In this case, your premium will not go up as high as you may initially expect.
Why do insurance companies increase premiums after an accident?
While it may seem like a punishment, higher insurance rates aren’t meant to make drivers feel sorry about the accident. Insurance companies increase premiums to protect themselves.
When selling insurance, to calculate the rate, the company considers a variety of factors, such as age, driving history, years of driving experience, credit score, location, insurance history, claim history, and the like.
Once you get into an accident, some of these factors change. Insurance companies simply use the new information to recalculate your rates. After an at-fault accident, you become a higher risk. By raising the premium, the company makes sure that it has enough money to make payments in case of a new accident.
If you consistently get into accidents, an insurance company may decide not to renew your policy instead of increasing the premium.
How can I offset the insurance increase after a car accident?
While it’s hard to avoid a rate spike after the accident, it’s possible to minimize it. Here are a few things to consider.
Timely Reporting
No matter how minor your accident is, you have to report it to the insurance company as soon as possible. When the accident occurs, your insurance company has to prepare for negotiations with the other side. To do that, they have to collect evidence and speak with attorneys.
With the right approach, they may be able to reduce the payout or avoid it altogether. In this case, your rates aren’t likely to go through the roof.
The longer you wait to report the accident, the fewer chances the insurance company has to defend itself. Evidence becomes outdated, witness memories fade, and the other party’s car accident lawyer gains a competitive edge.
Hiding the accident from the insurance company is rarely an option. The other party is likely to report it immediately and file a claim to recover damages.
Accident Forgiveness Coverage
Some insurance companies are willing to forgive the driver for their first at-fault accident. While some companies provide this type of coverage as an add-on, others include it for free.
Keep in mind that:
- To qualify for this coverage, you need to have a pristine driving record.
- Not all states allow accident forgiveness coverage.
- The accident will still stay on your record.
Ask your insurance company about the accident forgiveness coverage. It can keep the rate from going up.
Raise the Deductible
While the insurance company may view you as a high risk, you are likely to start driving even more carefully after the accident. You might even consider taking a couple of driving classes.
To lower your insurance premium, you may want to increase the deductible. The majority of insurance companies offer lower rates with higher deductibles. However, you have to keep in mind that if the accident happens, you will need to pay a higher amount.
Review Your Coverage
When was the last time you looked at your insurance coverage add-ons? Some of them may not be as important as you may think.
Once the rate goes up, you may want to consider dropping a couple of add-ons that don’t seem vital at the moment. For example, if you have a low-value vehicle, you may want to stop paying for comprehensive insurance.
If you have a high-value vehicle, you can take a different approach and add some security like a tracking device or an immobilizer. This can lower the rate.
Shop Around
Another effective way to decrease the premium is to shop around. Other insurance companies may offer you a lower rate even with your claim history in mind.
However, they may have a different view of other premium-affecting factors. That’s why it’s important to do thorough research before switching.
Work On Your Credit Score
Your credit score affects your insurance premium. While this may seem like a long shot, improving the credit score can reduce your payments in many states.
How much does car insurance go up after a minor accident?
Minor accidents are highly common, especially in cities. These collisions usually don’t require large insurance payouts. In a minor accident, the damage amount doesn’t affect the surcharge.
For example, if your fender bender costs $100, the premium will increase just as much as it would in case the damage was $1,000. That’s why if the deductible is larger than the damage amount, many drivers choose not to file a claim at all.
Can my insurance go up if the accident isn’t my fault?
In most cases, your insurance rates don’t go up after a no-fault accident. The at-fault driver’s insurance company is responsible for covering damages. However, some insurance providers also look at your previous claim history before making a decision.
If you have a clean driving record, the insurance isn’t likely to increase. However, if you’ve been in at-fault accidents before, a no-fault collision could result in a premium increase. In some states, no-fault drivers face up to a 10 percent rate spike after another driver crashes into them.
In some states (e.g. California and Oklahoma), insurance companies aren’t allowed to raise premiums after a no-fault accident.
Do all accidents affect my insurance rate?
Not all car accidents affect your insurance premium. Even if your insurance company has to pay up, it may not raise the rate because the accident was out of your control. These claims don’t make you a risky driver.
For example:
- An accident occurred when your vehicle was legally parked.
- Another car rear-ended yours, but the driver didn’t get charged with a moving traffic violation.
- The collision occurred due to a hit-and-run accident.
- The accident involved hitting an animal.
- Your car was damaged by falling or flying objects.
- The court ruled against the person who caused damage in your accident.
- You filed a claim under the personal injury protection (PIP) coverage and received compensation through it.
While one or two of these claims won’t raise your insurance rate, multiple out-of-control accidents may seem suspicious to the company. Eventually, the insurer may decide to raise the premium anyway.
It’s important to conduct in-depth research on the reasons why your insurance rates go up. The premium increase could happen automatically. Take the time to speak to the insurance company rep about circumstances that may help you avoid it.
How do I prove that the accident isn’t my fault?
To avoid a significant rate increase, you have to prove that the accident wasn’t your fault. While some collisions are straightforward, others require investigation.
Your insurance company is likely satisfied with:
- A police report that states who is at fault.
- A document from the at-fault driver’s insurance company that accepts the fault.
- A document that you received reimbursement for the damages.
- The at-fault driver’s written statement, admitting their fault.
In questionable situations, an at-fault driver may hire a car accident attorney to prove that you share the fault for the accident. In this case, if the damages are sizable, you may also need legal representation.
How long does the accident affect my car insurance rate?
If the insurer raises your premium after an accident, it doesn’t mean that you have to pay higher rates forever. Typically, the duration of the premium increase is between three and five years. If you don’t get into an accident during this period, your rate is likely to go back down.
Remember, any accident can affect the duration of the increase. So even if a no-fault collision occurs, it could delay the rate decrease.
With some insurance companies, the extra money you have to pay after the accident may decrease steadily every year that passes without an accident. Others simply decrease your premium when the period is up.
Keep Track of the Penalty
If the penalty period ends before the end of your policy, the accident doesn’t disappear from the insurance record automatically. So you will only stop paying the surcharge after policy renewal.
For example, if your penalty period is up in March, but the policy renewal is in December, you will be paying an increased rate for nine extra months.
To make sure you don’t overpay, keep track of the time when the penalty should expire. Once it does, speak to the insurance company representative, so they adjust the rate manually.
Should I skip insurance and try to pay for a car accident privately?
Since a premium increase can be significant after an accident, many drivers wonder if settling the claim on their own is a cheaper way out.
While it may make sense for minor accidents, this approach comes with a variety of risks. If you are unable to settle the claim with the other driver privately, you may lose your chance to do it through insurance.
In the future, the other driver may decide to file a lawsuit against you to recover damages anyway. The Statute of Limitations on personal injury claims varies by state but is usually rather long—about two to four years.
Keep in mind that even a minor fender bender could result in whiplash or other injuries. If the other driver doesn’t discover them immediately, they have plenty of time to do it later. If that happens, and medical bills start piling up, a private settlement is usually out of the question.
If any injuries are involved, the law obligates you to report the accident. Saving money on insurance premiums isn’t worth getting into legal trouble.
The Takeaway
If you are responsible for a car accident, your insurance rate can go up by 2 percent to 40 percent and beyond. The amount depends on many factors, including the severity of the accident and your previous claim history. Your premium can also go up if you aren’t at fault for the crash.
The increase isn’t permanent. Your rate will go down after three to five years of accident-free driving. In the meantime, you can reduce the premium by shopping around for other insurance companies, adjusting your deductible, reviewing your coverage, and working on your credit score.
