The Surprising Truth About Minor Accidents And Insurance Rates

Car insurance rates typically increase after an accident, even if it's minor. This is because insurance companies calculate premiums based on risk, and a driver with an accident on their record is statistically more likely to be involved in another incident. The increase in insurance rates can vary depending on factors such as the driver's age, location, and insurance provider. On average, car insurance rates go up by around 40% to 50% after an at-fault accident, but this can be higher if the accident results in serious injuries or property damage.

Minor accidents may not increase your insurance rates if you have accident forgiveness

Accident forgiveness is an additional coverage that you can add to your auto insurance policy, which protects your rate after your first accident. This means that your insurance price won't increase due to your first accident. However, accident forgiveness is not available in California.

To be eligible for accident forgiveness, you must have a clean driving record for three to five years. This means having no accidents or violations in the last three to five years. Drivers under 25 must have five consecutive clean years before their first accident is forgiven.

Accident forgiveness can be offered as a free loyalty perk for long-term customers with clean records, or as an optional add-on for an extra cost. If you choose to pay for accident forgiveness, it will often cost an additional 2% to 9% of your premium, although this varies by state and insurer.

While accident forgiveness can provide peace of mind, it may not always be the most cost-effective option. If you don't end up causing an accident, you will have paid extra for coverage you didn't need. Additionally, even with accident forgiveness, you may still lose any good driver or claim-free discounts you had, which could result in a premium increase.

Your rates may still increase if you file a claim, even if you're not at fault

Even if you are not at fault for an accident, your insurance rates may still increase if you file a claim. This is because insurance companies calculate premiums based on risk. If your insurance company pays to cover your claim, your rates could increase depending on your state and insurance company.

In no-fault states, everyone involved in an accident files a claim with their own insurer for injuries. Because of this, residents of those states may see rate increases after an accident, no matter who is at fault.

However, some states, including Oklahoma and California, do not allow insurers to increase your rates if a crash was not your fault. Some companies, such as USAA, also say they usually won't raise rates if you aren't responsible for an accident.

If you've been in an accident, it's always a good idea to compare car insurance quotes to make sure you're getting the lowest price.

If you have a generally good driving record, your rates may not increase as much

If you have a good driving record, your rates may not increase as much following a minor accident. However, it is important to note that car insurance rates are highly individualized and based on several factors, including location, the type of vehicle insured, the policyholder's insurance score, and the driver's age.

Having a good driving record can work in your favour when it comes to mitigating increases in insurance rates after an accident. A good driving record demonstrates that you are a safe and responsible driver, which can help offset the negative impact of an accident on your insurance rates.

Additionally, insurance companies typically consider the last three to five years of a driver's record when setting rates. So, if your accident occurred several years ago and you have maintained a clean driving record since then, your rates may not be significantly affected.

It is also worth noting that not all accidents are treated equally. Minor accidents, such as fender benders, may not have the same impact on your insurance rates as major accidents. If you are found to be not at fault for the accident, your rates may also remain relatively unchanged.

To maintain low insurance rates after an accident, it is advisable to shop around and compare rates from different insurance providers. Different insurers have varying policies regarding rate adjustments after accidents, and you may find more favourable rates with another provider, especially if you have a good driving history.

The more time has passed since the accident, the less it will affect your insurance rates

The impact of an accident on your insurance rates is not permanent and will lessen over time. An accident will usually affect your insurance rates for three to five years, after which your rates should return to normal. The more time that passes since the accident, the less it will impact your insurance rates.

In the immediate aftermath of an accident, you can expect your insurance rates to increase. The exact amount that your rates will go up depends on a variety of factors, including the insurance company, the state, the nature and severity of the accident, and the driver's age and gender. The increase could be as low as 28% or as high as 70% or even 97% in the case of an accident with injuries in California. The national average rate increase is 45% after an accident with property damage and 47% for accidents resulting in injuries.

After an accident, it is a good idea to shop around and compare insurance rates from different companies, as you may be able to find a cheaper rate. You can also explore other options to lower your insurance bill, such as improving your credit score, increasing your deductible, or looking for discounts and other insurance programs.

You can lower your rates by improving your credit score

While it is true that car insurance rates typically go up after an accident, especially if it was your fault, there are ways to lower your rates over time. One way to do this is by improving your credit score.

In most states, insurance companies use your credit score to help determine your insurance premium. This is because research shows that individuals with better credit scores are less likely to file insurance claims, and so insurance companies reward these customers with lower rates. Therefore, improving your credit score can help lower your insurance premium.

• Pay your bills on time. Paying your bills on time can positively impact your credit score and, consequently, your insurance score.
• Keep hard credit inquiries to a minimum. Too many hard inquiries, such as when you apply for a loan or line of credit, can negatively impact your score.
• Monitor your score regularly. Keeping an eye on your credit score can help you take proactive measures to improve it and spot any errors or signs of identity theft.
• Maintain old lines of credit. The duration of your credit history can contribute significantly to your score, so consider using an old credit card sparingly and making timely payments.
• Be aware of your credit utilization ratio. This is the measurement of how much credit you have available versus how much you use. It is recommended that you use no more than 30% of your total available credit.

Frequently asked questions