When you suffer an accident that wasn’t your fault you aren’t going to be happy at all. You would be angry with third parties who caused the damages. Then you need to worry about what will happen to your premium at the next renewal. On top of it, if you face no fault accident insurance premium increase you will probably be livid. Do insurance rates go up after no-fault accident, anyway?
Does your Insurance Go up if It’s not your Fault?
To answer this question we need to look at how the fault is determined and who pays for the damages.
Scenario 1: If the other party is deemed to be fully responsible for the incident and agrees to pay for your loses this would save you a lot of hassle. It doesn’t matter if the third party pays directly or their insurers pays. If the accident wasn’t your fault and your insurer hasn’t paid a dime there is no reason why a non fault accident should increase car insurance rates.
Scenario 2: If your damages are not being paid or paid in a timely manner you may need to make a claim on your own collision coverage and get your insurer involved. Once they pay your losses they may go after the at fault drivers or their insurers. If they can successfully recover the money they paid for your damages the incident can go down as no fault accident. In such cases, you would receive the deductible you paid due to no fault auto insurance claim you had to make. This outcome would reduce the upward pressure on your vehicle insurance rates. See below what happens when your insurer cannot recover any money.
Why Do Insurance Rates Go Up after No-fault Accident?
Every incident has the potential to cause premium increase. The rate increase can be small or large depending on circumstances. If you are not getting the discounts you used to get it means your rates are affected by recent the accident. Even though it wasn’t your fault, your insurer will still have to consider the fact that they lost money if they fail to recover the claim payment they had to make in the above scenario.
The situation is totally different in no-fault states where you may not be allowed to claim on at fault third parties. Then, your insurer will have to pay for your losses even though you were totally innocent and this no fault collision will potentially increase your premium. Who was at fault in a collision is still determined even though you may live in a no fault insurance state. Therefore, how much your premium will go up may still depend on who was at fault in the crash.
Furthermore, all parties involved in a vehicular crash may be comparatively at fault. You may not be the person who caused the accident but something you did may have contributed to the collision. When the fault is shared between parties involved who pays for the claims depends on your state insurance laws. For example, some states would split the damages according to comparative fault while other states may have a cut off point before your contribution to incident can be considered material. If your insurer ends up paying even a small portion it will affect your auto insurance rates.
If you end up getting a moving violation ticket after the accident you won’t be pleased with its effect on your premiums. Police is likely to be involved in serious accidents with damages and injuries. Also, they may be involved in accidents with minor damages and prepare a report and it may follow up with a citation. This is highly likely to affect your rates too.
How Much Does a No Fault Claim Affect Insurance?
Many policyholders are scared that any claim will increase their premiums. This is not true because some claims don’t affect your auto insurance rates. The effects of any claim on your premium depend on several factors as discussed below.
1. Who Pays for the Claim: As shown on Scenario 1 and 2 above, your rates shouldn’t be affected by no-fault claims that eventually don’t cost any money to your insurer. They don’t pay for the claim and therefore they have no reason for wanting to charge you more.
If you end up claiming from your own insurer for the damages that weren’t your fault your premium is likely to go up and the following factors may increase or reduce the effect on your rates.
2. Size of Claims: Smaller claims of under $2,000 usually affect your rates less. The amount of money paid out does affect insurers’ decision as to how much to increase premiums.
3. Number of Previous Claims: If this claim comes after several other claims it is difficult to explain that the latest one was just an unfortunate case of wrong place and time. Usually, the first claim is considered a bit more leniently while the consequent claims can even result in refusal of auto insurance renewal.
4. Your Driving Record: If you are a teenage driver your premium may be affected even it was a total no-fault collision. You may not see premium increase but it is an increase when your premium doesn’t go down the way it should. Your insurer can be more lenient if you have been driving for a long time and have a clean driving record.
5. Your State: State insurance laws can prevent or allow insurers to apply surcharges or offer discounts in certain cases. Also, nearly all no fault claims will affect your car insurance rates if you live in a no-fault state as explained above.
Possibilities following a Collision that Was Not Your Fault
After an accident caused by third parties you should first consider making a claim on the responsible parties’ insurance. If they accept the responsibility and happy to pay for the damages through their insurers or privately you may not even need to bother your insurer . It may not be a big issue that your insurer finds out about the accident as they should let it pass without rate increase. It is pretty straight forward when the other parties accept full liability.
However these things are not usually straight forward. It is possible to allocate the blame proportionately as mentioned above. While the other parties are 80% responsible you may still be found 20% responsible and the damages can be settled according to these proportions. Other drivers may accept partial liability but blame you too. In such cases, you may need to get your insurer involved and both companies will agree on a settlement.
What Happens When At-fault Drivers Don’t Co-operate?
Liable third parties may decide to bury their heads in the sand and ignore all attempts to contact them. Then, it may be necessary to play hard balls and your insurer will most likely take the necessary actions, providing you have coverage. Your Collision coverage would normally allow you to make a claim on your policy if the third parties are slow in paying or ignoring your claim totally.
It is understandable if you want the damages repaired quickly and get back to normalcy as soon as possible. The others may be hoping that you will get tired and get lost. However, your auto insurer isn’t likely to give up on recovering the damages even after they paid you. Most car insurers try to recover the money paid out to policyholders from third parties or their insurer once their fault is established.
Once the repairs are done to your vehicle you would need to pay the deductible on your policy. Should your insurer recover all the claim costs they would return the deductible back to you and you should be able to keep your cheap auto insurance rates.
The portion of blame and weather your insurer can subrogate the losses will affect how much your rates will go up. When third parties are to be fully blamed and the insurer recover the whole losses they are unlikely to increase your premium or increase would be slight.
If you see unreasonable car insurance premium increase after no fault accident you should remember that there are plenty other cheap auto insurance companies. Actually, you should always get alternative quotes at each renewal to compare prices, coverage and insurers. Today, it is pretty quick to shop and buy auto insurance online and many people save enough money to switch insurers.