Auto Insurance's Long Memory: Unraveling The Wreck History

How long do car accidents stay on your record? This is a question many drivers ask themselves, especially after being involved in a collision. The length of time an accident stays on your record depends on several factors, including the state you live in, the severity of the accident, and your insurance company. While the timeframe can vary, accidents typically remain on your record for around three to five years. However, more serious incidents, such as driving under the influence (DUI), may be reflected on your record for ten years or more.

How long do auto insurance companies look back?

The length of time auto insurance companies look back varies, but it is typically between three and five years. This is known as the "look-back period". The look-back period is used to calculate your insurance rates and determine your eligibility. Insurance companies will look at your driving record and claims record from the past three to five years when setting your rates. This includes any accidents, violations, and claims you may have had during that time.

The length of the look-back period can depend on your state and insurance company, as well as the severity of any incidents. Some companies may only look back three years, while others may go back five years or more. For example, in California, serious offences such as DUIs can stay on your record for up to 13 years.

It's important to note that even if an accident falls off your record after a certain number of years, it may still affect your insurance rates for a longer period. This is because insurance companies typically surcharge rates for three to five years following a driving incident.

To find out how long an accident will stay on your record, you can check with your state's Department of Motor Vehicles (DMV). You can also contact your insurance company or agent to find out how long a specific incident will impact your rates.

How do at-fault accidents affect insurance rates?

Accidents you cause will almost always raise your insurance rate. The exact rate increase will depend on the type of accident, your insurer, and your state. In certain states, your insurer may not raise your premium for an accident if the damage is under a certain dollar amount. Your insurance company will stop charging you for the accident after a certain number of years, typically between three and five years, but this length varies by insurer and state.

Serious accidents may stay on your record longer. For example, in Michigan, points stay on your license for at least two years, but convictions, which can be for serious offences, stay on your record for at least seven years.

If you've been in an at-fault accident, your insurance premium is almost certainly going to rise. However, factors like accident forgiveness in your policy, taking a defensive driving course, or having an otherwise clean driving record can mitigate this increase.

In most states, Progressive offers accident forgiveness for your first claim that totals less than $500 as soon as you become a customer. Similarly, Allstate offers accident forgiveness that may cover both at-fault and not-at-fault accidents and takes effect the same day you purchase the coverage.

If you are involved in an accident that is not your fault, your rates may still increase, especially if you've made more than one not-at-fault claim within a set period of time, usually three or five years.

How do no-fault accidents affect insurance rates?

No-fault accidents can affect insurance rates in a variety of ways, and there are several factors that determine the extent of the impact. Firstly, it's important to understand the difference between at-fault and no-fault accidents. At-fault accidents are those where the driver is deemed responsible for causing the collision, while no-fault accidents occur when the driver is not deemed responsible. The determination of fault plays a significant role in the subsequent insurance proceedings.

In general, a no-fault accident will not cause a driver's car insurance rates to rise. This is because the financial responsibility for compensating the non-fault driver falls on the at-fault party's insurance provider. As a result, the non-fault driver's insurer does not need to pay out money, and their premiums remain unaffected. However, this is not always the case, and there are scenarios where a no-fault accident can lead to increased insurance rates.

One such scenario is when the at-fault driver has insufficient insurance coverage or no insurance at all. In these cases, the non-fault driver may need to rely on their own insurance policy, specifically their uninsured/underinsured motorist coverage, to cover their expenses. Utilizing this coverage may result in an increase in insurance rates, as the insurance company may view the claim as an indicator of higher risk. This is despite the driver not being at fault, and it's worth noting that uninsured/underinsured coverage is optional in most states.

Additionally, the severity of the accident, the driver's previous driving record, and their history of multiple claims can all influence insurance rates after a no-fault accident. More severe accidents, a history of traffic violations or accidents, and multiple claims within a short period can lead to higher insurance rates, as insurers perceive these factors as indicators of higher risk.

It's also worth noting that state laws and insurer policies play a significant role in how insurance rates are impacted by no-fault accidents. Certain states have no-fault laws, requiring drivers to file claims with their own insurance companies regardless of fault. In these states, insurance rates typically do not increase after a no-fault accident. However, in other states, insurers may consider the non-fault driver as a higher risk and raise their rates, depending on factors such as driving history and the severity of the accident.

Furthermore, insurance companies themselves have varying policies regarding no-fault claims. Some insurers uphold a policy of not penalizing drivers for accidents they didn't cause, especially when uninsured/underinsured motorist coverage is involved. On the other hand, other insurers may adjust premiums based on their own criteria, which can include the number and type of claims filed, irrespective of fault.

To mitigate potential rate increases after a no-fault accident, individuals can consider obtaining accident forgiveness coverage, which is offered by many insurance companies. This coverage aims to prevent rate increases following a first accident, although it may not entirely prevent future increases, especially if the driver previously qualified for safe driver or claim-free discounts. Additionally, individuals can shop around for better rates, review their coverage to ensure it aligns with their needs, and improve their credit score, as credit-based insurance scores can also impact car insurance premiums.

What is accident forgiveness?

Accidents generally stay on your record for three to five years, depending on your state and the insurer. This means that car insurance companies will usually only look at the last three to five years of your record when calculating your rates.

Accident forgiveness is an option offered by many insurers that, if you qualify, means they won't raise your premium after your first accident. It can be added to a policy or awarded to those with a good driving record. Some insurers include accident forgiveness at no charge, while others offer it as a purchased endorsement, meaning you pay a higher rate for the benefit. Accident forgiveness may not be available in all states and eligibility can vary by insurer.

Some insurers require you to have been accident-free for a certain number of years to qualify for accident forgiveness. Others offer it as an incentive to new customers switching from another insurer. Accident forgiveness may also be extended to parents of teenage drivers.

While accident forgiveness may seem like a "free pass", it's important to understand that the insurer does not erase the accident from your driving record. Instead, they simply agree not to include it in the calculation of future premiums. If you move to another insurance company, that new insurer may factor the "forgiven" accident into the calculation of your premium.

• Allstate: Accident forgiveness may cover both at-fault and not-at-fault accidents and takes effect the same day you purchase the coverage.
• American Family: Offers both purchased and earned accident forgiveness, which have different requirements. For the purchased option, you must have no at-fault accidents or violations on your record for the previous 12 months and no more than one at-fault accident in the past three years.
• Auto-Owners: Offers at-fault accident forgiveness as an add-on. When you purchase this optional coverage, your first at-fault accident will be forgiven, and the accident surcharge fee will be waived. Eligible drivers must be accident-free for at least 36 months before purchasing this benefit.
• Erie Insurance: Offers first-accident forgiveness to customers who have been with the company for at least three years. With this benefit, drivers won't have to pay an accident surcharge for their first accident.
• Farmers: Offers accident forgiveness as a perk for those who purchase a Smart Plan Auto policy. If selected, the insurer will not increase your premium after one at-fault accident and may renew the coverage every three years if you don't have another accident.
• GEICO: Accident forgiveness can be earned or purchased in states where it is available. GEICO Accident Forgiveness is per policy, not per driver. If you have multiple drivers on your policy, any eligible driver may use this benefit once.
• Nationwide: Applies accident forgiveness, when purchased, to the policy's first at-fault accident. It is limited to one use but can cover other drivers insured by the policy.
• Progressive: Provides accident forgiveness benefits in most states, with three levels: Small Accident Forgiveness, Large Accident Forgiveness, and Progressive Accident Forgiveness.

How can I lower my insurance rates after an accident?

Accidents can be stressful, and the last thing you want to worry about is how they will impact your insurance rates. While insurance rates typically rise after an accident, there are several strategies you can employ to lower your premiums. Here are some ways to reduce your insurance costs:

• Seek Coverage Elsewhere: Consider switching insurance providers after an accident. Different companies may offer more competitive rates, and shopping around can help you find a better deal. Keep in mind that your accident will remain on your record for up to five years, and it's essential to compare quotes from various insurers.
• Update Your Coverage: Review and adjust your auto insurance policy. You can increase your deductible, which will lead to a lower monthly payment on your insurance premium. However, ensure that you don't reduce your coverage too much to avoid significant out-of-pocket expenses if you're at fault in an accident.
• Go to Driving School: Enrol in a defensive driving or driver education course. Many insurance companies offer discounts for customers who complete these programs. These courses cover essential topics like road safety techniques and accident prevention, and they are often available online.
• Look for Discount Programs: Ask your insurance agent about various discount programs that may be available. These can include safe driving discounts, membership discounts for certain organisations, anti-theft and safety equipment discounts, paperless billing discounts, and multiple policy discounts.
• Improve Your Credit: In most states, insurance companies take your credit score into account when determining rates. Improving your credit score by paying bills on time and reducing debt can help lower your insurance premiums over time.
• Bundle Your Policies: Using the same insurer for multiple policies, such as homeowners or renters insurance and auto insurance, can often lead to a multi-policy discount. This strategy can help reduce premiums for both types of insurance.
• Multi-Car Discount: If you have more than one vehicle, insuring them with the same company can result in a multi-car discount and lower premiums.
• Defensive Driver Discount: Taking a qualified defensive driver course may make you eligible for a discount, especially if you're over a certain age. Check with your state's requirements and your insurance company for more information.
• Driver Affiliations: Some insurance companies offer discounts for specific occupations or memberships in groups, alumni associations, or professional organisations. Ask your insurer about any applicable discounts you may qualify for.
• Telematics Discounts: This newer type of discount, also known as usage-based insurance, uses real-time data to personalise your rate. Telematics apps monitor your driving behaviour and may offer discounts for safe driving practices.
• Safe Vehicle Discounts: Insurance companies often provide small discounts if your car is equipped with safety features like airbags, anti-lock brakes, and anti-theft devices.
• Hybrid/Electric Car Discounts: Insurers are increasingly offering discounts for environmentally friendly vehicles, so consider switching to a hybrid or electric car to lower your insurance costs.
• Payment Discounts: Agreeing to pay your premium in full or enrolling in an automatic payment plan can sometimes lead to additional savings.
• Online Quote Discounts: Some insurance companies offer discounts if you request a quote and purchase the policy online, so be sure to ask about this when getting a quote.

Frequently asked questions