Auto Accidents And Insurance: Non-Injury Claims And Rate Increases

Car insurance rates can increase after an accident, even if it wasn't your fault. The increase in insurance rates after an accident depends on several factors, including the type of accident, the driver's record, the state, and the insurance company. While accidents that are not your fault may result in smaller increases, they can still impact your insurance premiums. It's important to note that insurance companies typically consider drivers with a history of claims to be higher-risk, which can lead to higher premiums.

How long does an accident affect insurance rates?

The length of time that an accident will affect your insurance rates depends on several factors, including the insurance company and the state in which the accident occurred. On average, an accident will impact your insurance rates for around three to five years. However, this duration can vary, with some states allowing insurance companies to apply surcharges for accidents that occurred within the past three years, while others permit surcharges for up to five years.

The severity of the accident also plays a role in determining the duration of the rate increase. Minor accidents, such as a fender bender in a parking lot, may result in a shorter rate increase period compared to major accidents. Additionally, some states have laws that prohibit insurance companies from raising rates if the claim amount is below a certain threshold. For example, in Massachusetts, there is no surcharge for accident claims under $1,000, while in New York, there is no surcharge if there are no injuries and the total damage is less than $2,000.

It is worth noting that even if you were not at fault for the accident, your insurance rates may still be impacted. This is more likely to occur in no-fault states, where all individuals involved in an accident file claims with their own insurance companies, regardless of who is at fault. However, some states, like Oklahoma and California, prohibit insurance companies from increasing rates if the accident was not your fault.

Does insurance increase after a no-fault accident?

Even if you are not at fault for an accident, your insurance rates may still increase. A 2017 study by the Consumer Federation of America found that some companies raise rates by 10% or more for not-at-fault accidents. However, this is not the case across the board, and some companies, such as USAA, say they usually won't raise rates if you are not responsible for an accident.

In no-fault states, everyone involved in an accident files a claim to their own insurer for injuries. Because of this, residents of those states may see rate increases after an accident, no matter who is at fault. A few states, including Oklahoma and California, don't allow insurers to increase your rates if a crash was not your fault.

If you live in a no-fault state, you're more likely to see a rate increase after an accident, no matter who was at fault. However, this is not always the case, and it's worth speaking to your insurance provider to find out their policy on no-fault accidents.

The amount your insurance goes up after an accident depends on several factors, including your insurance company, the state you live in, the car you drive, the severity of the collision, and whether the accident was your fault. If you are at fault, your rate will likely increase by around 45%. If you are not at fault, your rate will likely increase by 10% or less.

On average, a car accident will remain on your record for three to five years. However, this varies by state. For example, in Pennsylvania, an accident stays on your record for one year, while in Massachusetts, it stays on your record for six years.

If you are involved in a one-car accident or a minor fender-bender with another driver, you may want to pay for repairs out of pocket rather than filing a claim. However, if your provider finds out about it later, it could result in your policy being invalidated. In some cases, you don't have a choice. In New York, for example, an accident report must be filed if damages exceed $1,000 or if anyone is injured.

Another way to prevent your insurance rates from increasing is to purchase accident forgiveness. Many auto insurance companies offer this, either as part of a standard policy or as a separate rider. This prevents insurance rates from going up after an accident. Each insurer handles accident forgiveness differently. With Progressive, for example, a small claim (under $500) won't raise your rates in most states, and if you remain accident-free for five years, even a larger accident can be forgiven.

How to lower insurance rates after an accident

It is inevitable that your insurance rates will increase after a car accident, even if it was not your fault. However, there are several ways to lower your insurance rates after an accident. Here are some tips to help you reduce your insurance costs:

• Shop around for a new insurer: Compare car insurance quotes from different companies to find the best rate for your circumstances. While it may be challenging to find a policy with the same coverage at a lower price, other insurers may offer discounts better suited to your needs.
• Increase your deductible: Raising your deductible can lower your premium, but keep in mind that this means higher out-of-pocket expenses if you need to file a claim. Ensure you have enough savings to cover the deductible.
• Look for discounts: Many insurance companies offer various discounts, such as good student discounts, multi-policy discounts, and usage-based telematics programs that reward safe driving practices. Ask your current insurer about any available discounts or explore other insurers that may offer better discounts.
• Improve your credit score: In some states, insurance companies consider your credit score when determining rates. Improving your credit score by staying within a budget, paying off debts, and addressing discrepancies on your credit report may help lower your insurance rate over time.
• Review your policy and adjust coverage: If you need to lower your premium, consider changing your coverage options. Consult with a licensed agent to ensure you still meet the minimum required coverage levels mandated by your state. If you own your car outright, you may be able to reduce or opt out of comprehensive and collision coverage.
• Safe driving practices: Maintaining a good driving record is crucial. Avoid speeding, accidents, and other driving incidents to prove you're a low-risk driver. Consider enrolling in a safe driving program or taking a defensive driving course to improve your driving skills and potentially earn discounts.
• Bundle your policies: Combining your home and auto insurance policies with a single carrier is an easy way to lower your overall insurance rate. You'll also benefit from the convenience of managing just one account and making fewer payments.
• Choose a cheaper car to insure: The make and model of your car can impact your insurance rate. When shopping for a new vehicle, consider choosing a car that is safer and cheaper to insure.
• Explore payment options: Some insurance companies offer discounts if you pay your policy annually or semi-annually instead of monthly. You may also save by using a preferred payment method, such as linking a bank account or enrolling in automatic payments. Going paperless for your account statements can also reduce your premium and help the environment.

Accident forgiveness

It is important to note that accident forgiveness may not be available in all states and eligibility can vary by insurer. Additionally, accident forgiveness only applies to your insurance rates, and your accident will still be on your driving history, which can affect your insurance rates if you switch insurance companies.

How to prevent rate increases after an accident

While it is impossible to completely prevent rate increases after a non-injury accident, there are a few strategies you can use to mitigate the impact on your insurance rates. Here are some detailed instructions on how to do this:

• Enrol in an accident-forgiveness program: If you are enrolled in an accident forgiveness program before the accident, you may be eligible to have the surcharge waived. These programs are offered by many major insurance providers, but the guidelines and availability vary by state and company. Most programs allow you to waive the first at-fault accident from your policy, with a limit of one loss within a set timeframe, typically three to five years. Some companies may offer free accident forgiveness after you have been insured with them for a specific amount of time.
• Shop around for a new insurer: Since every car insurance company calculates rates differently, you may be able to find a cheaper rate elsewhere. While your driving record will still be accessible to other insurers, they may not weigh at-fault accidents as heavily as your current provider when determining your rates.
• Improve your credit: In most states, insurance companies are allowed to consider your credit-based insurance score when setting your rates. Improving your credit score through measures such as staying within a personal budget, paying off debts, and addressing any discrepancies on your credit report can help lower your insurance rates over time.
• Increase your deductible: Opting for a higher deductible on your comprehensive and collision coverage will usually result in lower insurance premiums. However, keep in mind that this also means you will have to pay more out of pocket if you need to file a claim. Ensure that you set your deductibles at a rate you could comfortably afford in case of an emergency.
• Look for discounts: Many insurance companies offer a range of discounts, such as good student discounts and multi-policy discounts. Additionally, consider enrolling in usage-based telematics programs, which monitor your driving in real time and reward you for safe practices.
• Update your coverage choices: If you need to lower your insurance premium, consider adjusting your coverage options. While you must still adhere to your state's minimum required coverage levels, removing any additional coverage you no longer need can help reduce your rates significantly.

Frequently asked questions