Auto Insurance Rates: The Post-Accident Impact

Car insurance rates typically increase after an accident, with the exact amount depending on factors such as the type of accident, the insurance provider, and the driver's location, age, and gender. The increase in insurance rates is often higher for at-fault accidents, especially those resulting in injuries or serious property damage. Even if a driver is not at fault, their insurance rates may still be impacted, especially if they have made multiple claims. To mitigate the increase in insurance rates, drivers can consider enrolling in accident forgiveness programs, improving their driving record, or shopping around for alternative insurance providers.

At-fault accidents

Being found at-fault in a car accident can have a significant impact on your insurance rates. This is because insurance companies calculate premiums based on risk, and a driver with an at-fault accident on their record is statistically more likely to be involved in another traffic violation in the future. As a result, insurance companies will typically adjust your premium to reflect the higher risk of insuring you.

The exact amount that your premium will increase depends on several factors, including your auto insurance provider, driving record, claims history, geographic location, age, and gender. Young drivers, for example, may experience the highest increases after an at-fault accident since insurers typically view them as an especially risky group to insure. The severity of the accident is also a factor, with accidents causing serious injury, extensive property damage, or accidents due to intoxication resulting in substantially higher insurance rates. In some cases, your insurer may even deny your policy renewal.

On average, car insurance rates go up by around 49% following an at-fault accident, with an average increase of $840 per year for full coverage insurance. However, this can vary depending on your state and insurance company. For example, an at-fault accident in California can double full coverage insurance rates, while an accident in Alaska only increases rates by 26%.

It's important to note that an at-fault accident will typically affect your insurance rates for around three to five years. After this period, your rates may drop back down if you remain claim-free. Additionally, some insurance companies offer accident forgiveness programs that may waive the surcharge for your first at-fault accident, although this may come at an additional cost.

No-fault accidents

While no-fault accidents generally do not cause car insurance rates to rise, there are some situations where insurance rates may be impacted. For example, if the at-fault driver has little or no car insurance, the not-at-fault driver's insurance company might utilise their uninsured/underinsured motorist coverage to cover expenses. This scenario increases the cost of doing business for the insurance company, and they may pass this cost on to their customers in the form of higher premiums.

Additionally, a no-fault accident will show up on your driving record, and insurance companies generally consider drivers with a history of claims to be more likely to file future claims, which can lead to higher premiums.

According to the Consumer Federation of America, drivers who have been involved in no-fault accidents experience an average premium increase of 10%. However, this impact on insurance rates can vary depending on the state and specific insurance company. Some states, such as California and Oklahoma, do not allow insurance companies to increase rates after a non-fault claim.

It is worth noting that even if your insurance rates increase after a no-fault accident, the impact is generally smaller than if you were the at-fault driver.

Accident forgiveness

Some major auto insurers that offer accident forgiveness include:

• Allstate
• Geico
• Nationwide
• Progressive
• The Hartford
• USAA
• American Family
• Auto-Owners
• Erie Insurance
• Farmers

If you have a good driving record and cause an accident, your insurance rates may increase by 45% for property damage and 47% for injuries. However, this varies depending on the insurance company and the state. For example, 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%.

Insurance rates by state

The cost of car insurance varies significantly from state to state. The national average annual cost of full coverage car insurance is $1,895, but this can range from $1,175 in Maine to $2,883 in Louisiana.

Factors Affecting Insurance Rates by State

Several factors influence the price of auto insurance premiums by state, including:

• Population density: Sparsely populated states like Idaho and North Dakota tend to have lower insurance rates than highly populated states like California and New York.
• Crime rate: States with higher crime rates, including theft, vandalism, and accidents, typically have higher insurance rates.
• Weather conditions: Severe weather events such as hurricanes, snow, and hail can cause significant damage, leading to higher insurance rates in states like Florida, Louisiana, and Michigan.
• Number of uninsured motorists: A high percentage of uninsured drivers can increase the risk of accidents and claims, resulting in higher insurance rates in states like Louisiana and Florida.
• State insurance requirements: Mandatory coverage requirements, such as personal injury protection or medical payment coverage, vary by state and can impact insurance rates.
• Local claims history: Insurance companies consider the frequency and severity of claims within a state or specific ZIP code when calculating rates.
• Cost of living: States with a higher cost of living may have higher insurance rates, as the cost of repairs and labour can be more expensive.
• Road conditions and infrastructure: Poorly-rated highway infrastructure can contribute to higher insurance rates, as seen in states like Delaware.
• Accident fatality rate: States with higher accident fatality rates, such as Louisiana and Kentucky, often have more expensive insurance rates.

Most and Least Expensive States for Car Insurance

As of 2024, the five most expensive states for car insurance, on average, are:

• Louisiana
• Florida
• California
• Colorado
• South Dakota

On the other hand, the five cheapest states for car insurance are:

• Maine
• New Hampshire
• Vermont
• Ohio
• Idaho

No-Fault vs. Tort States

It is also worth noting that insurance rates can vary between no-fault states and tort states. In no-fault states, each party typically files a claim with their own insurance company after an accident, regardless of who is at fault. In tort states, the at-fault driver's insurance company compensates the other driver for damages and injuries. This difference in liability can impact insurance rates, with no-fault states often having higher average premiums.

Lowering insurance rates after an accident

An accident can impact your insurance rates for up to five years, so it's important to know how to keep costs down. Here are some ways to lower your insurance rates after an accident:

• Shop around for a new insurer: It's always a good idea to compare quotes from different insurance companies. You may find that another company can offer you a more competitive rate, even with an accident on your record.
• Reduce your coverage: While you should always buy as much coverage as you can afford, if your rates become unaffordable, you could consider removing certain types of coverage from your policy or lowering your limits. Just make sure you're still carrying the minimum amount of car insurance required by your state.
• Take a defensive driving course: Many insurance companies offer discounts to drivers who complete an approved defensive driving or driver education course. In some states, insurers are required to provide this type of discount. Taking a course can also help you remove any tickets or points from your record if the accident occurred while you were committing a moving violation.
• Check for discounts: There are many different types of discounts that you may be eligible for, even with an accident on your record. These include safe driving discounts, membership discounts (for charitable organisations, community groups, professional organisations, etc.), anti-theft and safety discounts (for vehicles with safety features such as airbags and anti-lock brakes), paperless billing discounts, auto-pay discounts, and multiple policy discounts.
• Improve your credit score: In many states, insurance companies can consider your credit-based insurance score when determining rates. Taking steps to improve your credit, such as paying off debts and addressing any discrepancies on your credit report, may help lower your insurance rates over time.
• Increase your deductible: The higher your deductible, the lower your premium will typically be. However, keep in mind that this also means higher out-of-pocket expenses if you need to file a claim.
• Practice safe driving: The best way to lower your rates long-term is to avoid getting into any more accidents. Driving safely will also make you eligible for good driver discounts over time.
• Bundle your policies: Many insurers offer discounts if you use them for multiple insurance products, such as bundling your homeowners or renters policy with your auto insurance.
• Choose a different car: The make and model of your vehicle can impact your insurance costs. Some cars are more expensive to insure due to safety profiles, repair costs, and other factors. Consider switching to a vehicle that is cheaper to insure, such as a Toyota Camry.
• Look into accident forgiveness: Some insurers offer accident forgiveness, which means they won't raise your rates after your first accident. This may be offered as a free perk if you have a clean driving record, or you may need to pay extra to add it to your policy.

Frequently asked questions