Auto Insurance: Accidents And Their Impact On Eligibility

Accidents can be stressful, and the last thing you want to worry about is your insurance coverage. It's important to know how accidents can impact your insurance rates and whether you could be dropped from coverage. The number of accidents that disqualify you from auto insurance is not set in stone and varies across insurance providers. Some companies may drop you after one at-fault accident, while others may allow for two or more. Your driving record, age, location, and claims history are also considered when determining your eligibility and rates. Accidents that aren't your fault may still increase your rates, as they indicate a higher likelihood of future accidents. Additionally, comprehensive and collision claims can lead to higher premiums, as insurers view these as indicators of higher risk. To maintain coverage, you may need to switch to a company specializing in high-risk insurance if your current provider drops you. Understanding your insurance policy and knowing your options can help you navigate the challenges of accidents and insurance.

At-fault vs. not-at-fault accidents

The number of accidents that can disqualify you from auto insurance depends on the insurance carrier, the type of claim, the payout amount, and the number of claims filed in a given period. While there is no definitive answer, having more than one at-fault accident generally increases your chances of being dropped by your insurance company.

Now, let's delve into the differences between at-fault and not-at-fault accidents:

At-fault accidents refer to situations where one party is deemed responsible for causing the collision. In these cases, the at-fault driver's insurance company typically covers the injuries and property damage of the other driver and their passengers. At-fault accidents almost always lead to an increase in insurance rates and can result in the insurance company dropping the policy if there are multiple occurrences.

On the other hand, not-at-fault accidents are those in which the insured driver is not deemed responsible for the collision. In these cases, the insurance company of the at-fault driver usually covers the medical expenses and property damage of the other driver. While not-at-fault accidents may not always result in increased insurance rates, they can still impact your premiums, especially if you have filed multiple claims.

It's important to note that the specific implications of at-fault and not-at-fault accidents can vary based on state laws and insurance company policies. Additionally, some insurance companies offer accident forgiveness programs, where your rates may not increase after certain types of accidents, such as your first accident or minor accidents.

To determine fault in an accident, insurance adjusters typically review witness statements, police reports, accounts from the parties involved, and photos of the accident scene. The determination of fault plays a crucial role in how the insurance claim is handled and how it impacts your insurance rates.

Comprehensive claims

Comprehensive insurance coverage is an optional coverage that protects against damage to your vehicle caused by non-collision events outside your control. This includes theft, vandalism, glass and windshield damage, fire, accidents with animals, weather, or other acts of nature. It is important to note that comprehensive insurance is not a separate type of insurance, but rather a specific coverage that can be added to an existing policy. While it is not required by law in any state, lenders may require it if you are leasing or financing a vehicle.

When it comes to insurance rates, comprehensive claims tend to cost less than collision or liability insurance claims. Insurance providers consider comprehensive claims as events that occur outside the control of the driver. On average, a comprehensive claim will raise your premium by $5 per month, while a collision claim will result in a significantly higher increase of $384 for a standard six-month policy.

It is important to note that filing multiple comprehensive claims can still impact your insurance rates. For example, two comprehensive claims can raise your insurance rates by $82 over a standard six-month policy. Additionally, having multiple claims, regardless of the type, can put you at risk of being dropped by your insurance provider. As a general guideline, three claims within a three-year period may result in policy non-renewal or cancellation.

While comprehensive claims typically result in a smaller increase in insurance rates compared to collision claims, it is still important to consider the cumulative impact of multiple claims. Therefore, it is advisable to assess the cost of repairs and your ability to pay out of pocket before filing a claim, especially if the damage is minor.

Collision claims

Collision coverage, also known as car damage coverage, allows you to make a claim with your insurance company to pay for repairs to your vehicle, regardless of who was at fault for the accident. This type of coverage is optional unless required for your car loan or lease. Typically, you can either file a claim under your own collision coverage or file a third-party claim against the at-fault driver's liability coverage, but you cannot collect compensation from both. If you settle a claim under your own collision coverage, you usually waive your right to collect compensation from the other driver's insurance for the same property damage.

There are several advantages to using your own collision coverage. Firstly, your insurance company will likely pay your vehicle damage claim faster since collision coverage pays regardless of fault. In contrast, third-party claims require an investigation to determine blame, which can cause delays. Secondly, if you also have a third-party personal injury claim, you may not want to discuss details of the accident with the other driver's insurance company until you've fully investigated the matter. This issue doesn't arise when using your own collision coverage, as fault is not considered.

However, there are also disadvantages to using your own collision coverage. Your options are limited by your coverage limits, and you will have to pay a deductible when making a claim, which could be a large amount. Additionally, the claim process may be more restrictive and cumbersome than a third-party claim.

In terms of insurance rates, collision claims generally cost insurers more than other types of claims. As a result, your insurance premium may increase after a collision, as insurers may categorise you as a higher-risk driver. The exact rate increase will depend on factors such as the type of accident, your location, the insurer, and your driving record. It's important to note that insurance companies typically won't raise your rates until your policy renews, so it's advisable to wait until your current policy is about to expire before switching to a different company.

Accident forgiveness

Different insurance companies have different rules regarding accident forgiveness. For example, Progressive offers Small Accident Forgiveness for free in most states, which covers your first claim of $500 or less. They also offer Large Accident Forgiveness for customers who have been with the company for at least five years and have remained accident and violation-free during that time. GEICO offers a similar benefit, which can be earned for free or purchased as a premium option. Liberty Mutual also offers accident forgiveness for drivers with a clean policy over the last five years.

Switching insurance companies

There is no definitive answer to the number of accidents that will disqualify you from auto insurance. Each insurance company has its own regulations, and some may have limits such as two at-fault accidents in a year, while others may drop your policy after a single accident. If you have multiple at-fault accidents, insurers may categorise you as a high-risk driver, and you may need to search for a specialist company that is willing to cover you.

• Get quotes from at least three to five companies before committing to a new policy. Request quotes from an independent agent, a traditional agent, and an online-only agent.
• Research the company online through sources like the Better Business Bureau. Read customer reviews and look out for any red flags.
• When applying for auto insurance, you will need to answer questions about prior claims, accidents, and traffic tickets. Failing to disclose a recent accident when seeking quotes constitutes insurance fraud and can result in serious criminal penalties.
• If you obtain a lower quote from another provider, find out if your current insurance company will lower your premium to match.
• If you decide to switch, request to end your policy in writing and indicate the desired end date. Some companies may require a different process for discontinuing your policy.
• Ask about cancellation fees and refunds. Many companies allow you to cancel for free at any time, but some may charge a fee if you cancel before the end of your policy term.
• Notify your lender or leasing company about the change if you finance or lease your car. They will require proof of your new policy to ensure you continue to meet coverage requirements.

Frequently asked questions