Auto Insurance: Accident Cost

Car insurance rates typically increase after an accident, especially if it's an at-fault accident. The increase in insurance rates depends on several factors, including the type of accident, the driver's age, location, insurer, and driving record. On average, insurance rates can go up by hundreds of dollars annually, with increases ranging from 21% to 79% across different states and insurance companies. The impact of an accident on insurance rates usually lasts for around three to five years.

How much does insurance increase after an accident?

The amount that car insurance rates increase after an accident depends on several factors, including the type of accident, the driver's age, location, insurer, and driving record. While insurance rates typically rise after an accident, the increase is usually higher for at-fault accidents than for not-at-fault accidents.

According to a Forbes Advisor analysis, the national average rate increase is 45% after an accident with property damage and 47% for an accident resulting in injuries. However, these rates can vary significantly by state and insurance company. For example, in North Carolina, the average rate increase for a property damage accident is 79%, while in Wyoming, it is only 31%.

The impact of an accident on insurance rates can also depend on the severity of the accident. A minor fender bender is likely to have a smaller impact on insurance rates than a major accident with significant property damage or injuries. Additionally, some states have laws that prohibit insurance companies from raising rates for accidents under a certain dollar amount. For example, in Massachusetts, there is no surcharge for accident claims under $1,000, while in New York, there is no surcharge for accidents with no injuries and less than $2,000 in damage.

It is worth noting that insurance rates may still increase after a not-at-fault accident, especially if the driver has made multiple not-at-fault claims within a set period. Insurance companies may view multiple claims as an indication of a higher risk of future accidents.

To mitigate the impact of an accident on insurance rates, drivers can consider enrolling in an accident forgiveness program, improving their credit score, increasing their deductible, or shopping around for a new insurance provider.

How long does an accident stay on your record?

The length of time an accident stays on your record depends on several factors, including the state you live in, the type of accident, and its severity. While the exact length varies, it typically stays on your record for around three to five years.

In California, accidents remain on your record for three years, while in New York, it's three years from the end of the year the accident occurred, and in New Hampshire, it's five years from the date of the accident. Oregon maintains accident records for at least five years. These variations depend on the specific laws and regulations of each state.

The severity of the accident also plays a role in how long it stays on your record. Minor accidents or fender benders may not stay on your record for as long as more serious accidents, especially those involving DUI infractions or significant property damage. DUI convictions can remain on your record for up to 10 years or even longer in some states.

Additionally, the impact of an accident on your insurance rates can vary. While accidents generally lead to increased insurance premiums, some companies offer accident forgiveness programs that may help offset the financial burden. It's important to compare quotes from multiple companies to find the best rates, especially after an accident.

How can I lower my insurance rates after an accident?

There are several ways to lower your insurance rates after an accident. Here are some strategies to help reduce your premiums:

Switch Insurance Providers

Consider shopping around for a new insurance provider. Different insurers have varying policies on adjusting rates after an accident, and you may find a better rate with another company, especially if you have a good driving record or low-risk profile. It is recommended to get prices from other auto insurance carriers at least once a year to see if you can save money. According to The Zebra, State Farm, GEICO, or USAA typically offer the most affordable coverage rates after an accident, depending on the state.

Update Your Coverage

You can change the limits and terms of your auto insurance policy after an accident to save money. Consider increasing your deductible to achieve a lower monthly payment on your insurance premium. Ensure that you keep your deductibles at a rate that you could comfortably pay at short notice. You can also decrease your liability coverage limits, but make sure you still carry at least the minimum amount required by your state. Additionally, if you have comprehensive coverage on your vehicle, you may be able to drop this optional policy to lower your payments, especially if it is not required by your lease or finance contract.

Take Advantage of Discounts

Insurance companies typically offer a wide range of discounts that you may be eligible for. These can include:

• Safe driving discounts: For maintaining an accident-free record for a certain number of years.
• Membership discounts: For belonging to charitable organizations, community groups, professional organizations, alumni associations, or other clubs.
• Anti-theft and safety discounts: For having safety features such as airbags, anti-lock brakes, and anti-theft devices in your vehicle.
• Defensive driver education discount: For completing an approved defensive driving or driver education course.
• Paperless billing and auto-payment discounts: For choosing paperless billing or signing up for automatic payments.
• Multiple policy discounts: For bundling your insurance policies, such as homeowners or renters insurance with your auto insurance.

Improve Your Credit

In many states, insurance companies take your credit score into account when determining your insurance rates. Taking steps to improve your credit, such as paying bills on time and reducing debt, can help lower your insurance premiums over time.

Consider a Different Car

The make and model of your vehicle can also impact your insurance rates. Insuring a sports car, for example, is typically more expensive than insuring a sedan due to safety ratings, materials, cost of repair, and other factors. Consider choosing a vehicle that is cheaper to insure to help reduce your premiums.

Will my insurance go up after an accident?

It's important to note that insurance rates are calculated based on risk. If you are deemed a high-risk driver, your insurance premium will likely increase. There are several factors that determine the exact amount that your premium will increase, including your auto insurance provider, driving record, claims history, geographic location, age, and gender. Young drivers may experience the highest increases after an accident, as insurers typically view them as a risky group to insure.

If you are found to be at fault for an accident, your insurance premium will likely increase. On average, premiums for full coverage insurance go up by $840 after an at-fault accident, and a full coverage premium will increase by about 42% after such an incident. The increase in your insurance rate will also depend on the severity of the accident, with more serious accidents resulting in higher rate hikes. Accidents involving serious injury, extensive property damage, or intoxication can cause substantial increases in insurance rates and may even result in your insurer denying your policy renewal.

Even if you are not at fault for an accident, your insurance premium may still be impacted. If your insurance company pays to cover your claim, your rates could increase depending on your state and insurance company. This is especially true if you have been involved in multiple accidents, as insurers may view you as a high-risk driver.

It's worth noting that Florida has specific legislation regarding insurance rate increases after accidents. According to Florida Statute § 626.9541, insurance companies in Florida cannot raise premiums solely because the insured party was involved in an accident unless the "insured was substantially at fault." This means that unless you are found to be more than 50% at fault, your insurance company cannot legally increase your rates.

To find out how an accident will impact your insurance rates, it is recommended to consult your insurance representative. Additionally, comparing quotes from different insurance companies can help you find a more competitive rate.

Why do car insurance rates increase after an accident?

Car insurance rates are calculated based on risk. Statistically, drivers who have been in an accident are more likely to be involved in another traffic incident. A rate increase protects insurance companies from losing money. Therefore, your insurance company will adjust your premium to reflect the higher risk of insuring you.

Insurance companies perceive drivers who have been in accidents as high-risk, even if the driver is not at fault. This is because the driver may live or drive in an area where a high number of accidents happen, or they may have high-risk driving habits. When drivers are involved in accidents, they are more likely to require an insurance payout, regardless of coverage type.

After an accident, your insurance company will adjust your premium to reflect the higher risk of insuring you. The exact amount of the increase will depend on several factors, including your auto insurance provider, driving record, claims history, geographic location, age, and gender. Young drivers may experience the highest increases after an accident since insurers typically view them as an especially risky group to insure.

In addition, the severity of the accident will also impact the increase in your insurance rates. Accidents that result in serious injury, extensive property damage, or intoxication will lead to substantial increases in insurance rates. In some cases, your insurer may even deny your policy renewal.

If you are concerned about your car insurance rates increasing after an accident, there are proactive steps you can take to help prevent this potential spike in your premiums. Maintaining a safe driving history and completing a defensive driving course can help to keep your rates low. Additionally, some insurance companies offer accident forgiveness programs that waive the surcharge for the first at-fault accident.

Frequently asked questions