This article has been reviewed by licensed insurance industry expert, Moshe Fishman.
There’s a lot of information out there about car insurance rates, especially car accident insurance rates, after you submit a claim. Most people believe that car accidents automatically raise car insurance rates, but this is not always the case.
Read on to learn more about which types of accidents raise your insurance premiums and what you can do about it if it happens to you.
While not all types of car accidents impact your rates equally, a few varieties will nearly always result in an increased insurance premium.
Each of these types of accidents has one thing in common: The insurance company was required to pay money to cover damages that were determined to be your fault. Whenever this happens, your insurance rates will potentially increase.
Accidents are much less likely to impact your insurance rates when you are not at fault. These include:
Be sure to obtain a police report if you are involved in either of these types of accidents. The police report should clearly state that you are not at fault for the accident.
Car accidents result in increased premiums in a few ways. Your premium will never increase instantly after an accident. Instead, you will see an increase in your premium when you receive your renewal statement at the end of your policy period.
After an at-fault accident, an insurance company can add a surcharge to your policy for 3-5 years. The length of time a surcharge stays on your policy varies by company and state restrictions. For example, NY required insurance companies to drop accident surcharges after three years.
Surcharges are not only in play after an accident. You can also see a surcharge on your policy after being convicted of moving violations, DUIs, or other incidents. You can check your motor vehicle report at your state DMV website to see what can lead to surcharges on your policy.
Another way that an accident can impact your insurance premium is by leading to the loss of policy discounts for safe driving.
Many major companies offer some variation of an accident-free discount, giving you a reduced premium based on how long you have been accident-free. After an accident, this discount will fall off your policy, raising your premium cost.
You can find out which discounts you have on your policy by reviewing your car insurance declarations page or speaking with your insurance agent/broker. It is always a good idea to check on your discounts regularly to be aware of which you have and which you may be in danger of losing.
Suppose your vehicle was involved in an accident while driven by someone not listed on your policy. In that case, your insurance company might then require you to add them to your policy as a regular driver. Depending on who the driver is, this can increase a premium.
The most common example of this situation is a teenage driver being involved in an at-fault accident while driving their parent’s car. The insurance company might require the parent to then list their teenager as a regular driver of the vehicle, resulting in a higher premium because of the additional risks that come with new drivers.
There are a few ways to avoid an increase based on car accidents.
This one won’t help you if you already have an accident-related premium increase. However, it can still help you choose a policy that allows for accidents without penalty in the future.
When you set out to purchase car insurance, look for a policy that includes accident forgiveness. This will allow you to have one at-fault accident without your premiums going up. Keep in mind that this might not apply to keeping your “accident-free” discounts but will stop you from getting an accident surcharge.
Always ask your car insurance broker/agent if they offer an accident-free discount before purchasing a policy.
If you notice your premium increases at your renewal, whether it is due to an accident or not, call your company and ask for additional discounts on your premium.
While this will not work 100% of the time, you’d be surprised how often there are available discounts you can access. For example, some companies may allow you to complete a defensive driving course to offset the cost of an accident. Others might have discounts for organizations you are part of.
It never hurts to ask about discounts, especially if your premium has recently increased.
If your premium increased because you had to list a new driver after an accident, you could resolve this problem by proving that they have their own insurance.
By providing the insurance declarations page of the driver, you can assure them that the driver will no longer be a risk on your policy. Their own insurance policy would cover any future accidents, rather than yours.
If you are involved in an accident that is not your fault, always get a police report. Without a police report, the insurance company might not believe the damages were not your fault.
This is especially important if you are involved in a multi-car accident that you are not at fault for. Without a police report, it will be your word against the other driver’s.
Accidents in which you are at fault often raise your premium by adding surcharges, removing discounts, or requiring you to add risky drivers to your policy. You can avoid these surcharges by choosing policies with accident forgiveness, asking for additional discounts, and always getting a police report when you are not at fault.