You car insurance rates probably will go up after an accident, especially one in which you are at fault. But how much will they go up? Several factors contribute to a rate increase. First, if your insurance company determines that you were not carrying enough insurance on your vehicle at the time of the accident, they may require you to carry extra coverage, which means paying more to insure your car.
When processing a claim, insurance companies may look at several types of coverage—including collision, medical payments, uninsured and under-insured motorist coverage, personal injury protection, bodily injury liability, and property damage liability. Such types of insurance are designed to protect you and your passengers, the occupants of other vehicles involved in an accident, and any property damaged during an accident.
If you are at fault in an accident, your insurance company may opt to charge points against your policy when it comes up for renewal. Unfortunately, these points can be assessed for as long as seven years after the time of your accident, resulting in higher insurance rates. The way in which points are assessed varies by state—and may depend on your role (degree of fault) and the severity of the accident. In some states, if an accident is determined to be your fault, your premiums could increase by as much as 30%.
According to the Insurance Service Office, the general recommendation is that the insurer raise your premium by 20% to 40% of the insurance company’s base rate following a first accident in which you are at fault. The final decision, however, is at the discretion of your insurance company, and some elect not to raise a driver’s rates after only one accident.
The insurance industry is based on assessment of risk. Drivers who are involved in fewer accidents are perceived as safer (or low-risk) drivers, and thus are more likely to get lower rates. The more accidents a driver has, the riskier that driver becomes for an insurer, and this increased risk is reflected in increased rates. . Insurance companies see accident-prone drivers as bad risks, and in some cases can even terminate a driver’s policy based on the frequency and amount of accident claims filed.
Your driving record gives an insurance company a lot of information about who you are when on the road, and how safe or risky you are to insure. When determining your premium, companies may elect to look at your driving record—some going as far back as seven years, and others only three or five years. Some insurance companies even offer “accident forgiveness” as a way of rewarding drivers with particularly good driving records and an absence of prior claims.
You can find more about individual insurers and their policies by comparing car insurance quotes, while visiting CarInsuranceQuote.com.