Auto Accidents And Medical Insurance: Understanding The Financial Impact

Getting into a car accident is stressful enough, but the financial aftermath can be even more challenging. Car insurance rates typically increase after an accident, especially if you are at fault. The increase in insurance rates after an accident is due to insurers perceiving you as a higher risk. The amount your insurance goes up depends on several factors, including your insurance company, location, car type, accident severity, and whether you were at fault. On average, car insurance rates can go up by 47% annually if you cause an accident. However, this varies across different companies and states.

How much does medical insurance increase after an auto accident?

The amount by which medical insurance increases after a car accident depends on several factors, including the insurance company, the state, the car, the severity of the collision, and whether the accident was the policyholder's fault.

According to a Forbes Advisor analysis, the national average rate increase is 45% after an accident with property damage, and 47% for causing an accident that results in injuries. However, these figures vary by state. For example, in Wyoming, the average increase is 31%, while in California, it's 97% for accidents resulting in injuries.

The type of insurance company also affects the increase in rates. For instance, State Farm had the lowest average rate hike of 21% for at-fault accidents with only property damage, while Geico had the highest at 73%.

It's worth noting that even if the accident wasn't your fault, your insurance rates may still increase. This is because insurers assess risk based on statistics, and any accident, regardless of fault, indicates a higher chance of future incidents. However, a few states, such as Oklahoma and California, prohibit insurance companies from raising rates after a not-at-fault accident.

To mitigate the increase in insurance rates after an accident, consider taking advantage of discounts, improving your credit score, and shopping around for alternative insurance providers.

Does medical insurance increase after a no-fault accident?

Whether or not your medical insurance rates will increase after a no-fault accident depends on several factors. Firstly, it is important to understand the difference between at-fault and no-fault accidents. A no-fault accident means you weren't the party who caused the collision, while an at-fault accident means you are responsible. In the case of a no-fault accident, the at-fault party's insurance provider will typically be responsible for your medical expenses and vehicle repairs. This means that your insurer doesn't have to pay out, and your premiums are unlikely to increase.

However, there are situations in which your insurance rates may still go up after a no-fault accident. If the at-fault driver has little or no insurance, your insurer might have to dip into your uninsured/underinsured motorist coverage, which could result in higher premiums. Additionally, if you have made multiple claims within a short period, your insurance company may view you as a higher risk and increase your rates. The circumstances of the accident, the types of coverage you have, and your claims history can also play a role in determining whether your rates will increase.

It's worth noting that the impact of a no-fault accident on your insurance rates is generally smaller than that of an at-fault accident. The increase in your premiums will likely be less than if you had caused the accident. Additionally, some states, such as California and Oklahoma, prohibit insurance companies from increasing rates after a non-fault claim.

How long does an auto accident stay on your record?

The length of time an auto accident stays on your record depends on several factors, including the state you live in, the severity of the accident, and your insurance provider. While the exact duration can vary, accidents typically remain on your record for around three to five years. However, more serious violations, such as driving under the influence (DUI), can stay on your record for much longer, and in some cases, permanently.

For example, in California, accidents generally stay on your record for three years, unless they involve a commercial vehicle or hazardous materials, in which case the duration is extended to ten years. On the other hand, in Michigan, most at-fault accidents remain on your record for seven years, while accidents involving fatalities or DUIs are permanent fixtures.

It's worth noting that insurance companies usually have access to the previous seven years of your driving record, and they use this information to determine your premiums, often increasing your rates for three to five years following an accident. As a result, even though accidents will always technically be on your record, they will only impact your insurance costs for a limited period.

How can I lower my medical insurance rates after an auto accident?

It's bad news: your medical insurance rates will likely increase after an auto accident. This is because insurance companies calculate premiums based on risk, and drivers who have been in one accident are statistically more likely to be involved in another. However, there are several ways you may be able to lower your insurance rates.

Seek Coverage Elsewhere

Insurance experts often recommend switching insurers after an accident. You may be able to find a better price simply by going with a different firm. Get prices from other auto insurance carriers at least once a year to see if you can save money. According to The Zebra, you will likely find the most affordable coverage rates after an accident from State Farm, GEICO, or USAA, depending on the state where you live. However, USAA is only available to current and former military members and their families.

Update Your Coverage

Changing the limits and terms of your auto insurance policy after an accident can also save you money. You can increase your deductible to achieve a lower monthly payment on your insurance premium. Just make sure you don't cut your coverage so much that you will be left with significant out-of-pocket costs if you cause an accident.

If you have comprehensive coverage on your vehicle, dropping this optional policy can also lower your payments. You can even temporarily discontinue this type of coverage until it becomes affordable again after six to 12 months without claims. However, if you lease or finance your vehicle, your contract may require you to carry this type of policy.

Go to Driving School

Many insurance companies will discount your rates if you complete a defensive driving or driver education course. Defensive driving classes cover road safety techniques, ways to avoid accidents, and traffic laws in your state. According to Car Insurance Comparison, parents can save about 10 to 20 percent on their auto insurance premiums when teens on their policy take a drivers education course as insurers associate the completion of defensive driving classes with lower accident risk.

Look for Discount Programs

There are many types of discounts available for auto insurance customers. These include safe driving discounts, membership discounts, anti-theft and safety discounts, defensive driver education discounts, paperless billing discounts, upfront and auto-payment discounts, and multiple policy discounts. After an accident, check with your agent to see about eligibility for these and other savings programs.

Improve Your Credit

If you have below-average credit, your score can result in higher insurance rates in many states. Taking steps to improve your credit, like paying bills on time and reducing your overall amount of debt, can help you earn lower auto insurance premiums.

What is accident forgiveness?

Accident forgiveness is an optional auto insurance benefit that prevents insurance rates from increasing after a driver's first at-fault accident. It can be added to a policy or awarded to those with a good driving record. Accident forgiveness may allow drivers to save on their premiums and retain good driver discounts.

Accident forgiveness is offered by many insurers, but it is not available in all states. Some insurers offer it as a free loyalty perk for long-term customers with clean driving records, while others make it an optional add-on that can be purchased to put customers' minds at ease.

To be eligible for accident forgiveness, a clean driving record is required for three to five years. Therefore, only those who tend not to cause accidents are eligible to pay for this benefit.

• Allstate
• American Family
• Auto-Owners
• Erie Insurance
• Farmers
• GEICO
• Nationwide
• Progressive
• USAA

Frequently asked questions