At fault accidents are the primary tell sign that there is something wrong with your driving. Do insurers take the same view or they may be more forgiving after just one incident? In 2013, total cost of auto accidents in the US was $871 billion which equates to more than 6% of the gross domestic product, according to Insurance Information Institute. That equates to almost $3000 for each person in the country. Someone has got to pay for it. Of course, the cost is born by the whole society, including local and federal governments, insurance companies and policyholders. It is only fair that the driver who caused the accident starts paying a little bit higher auto insurance premium.
So, How Much Does your Premium Go Up following an Accident?
After a sizable claim due to a traffic incident in which you were at fault you may see premium increases as much as %50 with some companies. Many companies have already moved away from traditional premium pricing where they placed significant weight on driving records. Today, many companies use financial indicators as well when they are trying to assess the risk levels.
If you haven’t had any claim for a long time, have good driving history with no traffic violation tickets and it is not large you may only see slight increase on your auto insurance, depending on your insurer. Companies look at past history but this is mainly because they want to predict the future. With those credentials there would be several companies who would predict that you wouldn’t have another accident any time soon and take a chance on you. If your current insurer doesn’t take this view you should get a few other quotes and see who would.
The answer to how much does insurance premium increase after a car accident mainly depends on the size of the claim and who was at fault. Small vehicle insurance claims are known to cause lower insurance rate increases compared to larger ones. Severity of the crash and costs are probably the most important factor in premium increases for many insurers along with who was at fault. A small scratch caused by vandals is never the same as a full blown head-on collision you caused.
According to an article published on CBS News site, a single at fault accident claim of over $2,000 result in 41% premium increase on average. This translates to a $345 increase for the average US car insurance premium of $841 a year. Drivers who make 2 claims in one year can see 93% premium increase.
Also, there is large differences in states in terms of vehicle insurance premium increases after accidents. A traffic injury claim over $2,000 can increase your rates on average as follows;
5 states with the largest average premium increase after a bodily injury claim:
- California: 86 percent.
- Massachusetts: 83 percent.
- New Jersey: 69 percent.
- North Carolina: 58 percent.
- Minnesota: 52 percent.
These 5 states had the smallest average premium increase after a bodily injury claim:
- Maryland: 22 percent
- Michigan: 25 percent
- Montana: 27 percent
- Oklahoma: 27 percent
- Mississippi: 28 percent
It appears, states that don’t allow insurance companies to take financial factors like credit score into account see the largest premium increase after a large car accident. This is mainly because insurance companies have to heavily rely on your driving records on these states whereas they can look at other factors and try to see if you are more stable or explosive driver that will go into claims spree.
Why you made a claim play an important role as well. The highest possible premium increase would be for a claim following a vehicular collision in which you were 100% at fault and you received a ticket from police as a result of it.
The general consensus is that no fault accidents shouldn’t affect your car insurance rates. You may have to make claims due to events out of your control. They will still go down as a claim and you will see premium increase. But these increases may not be as scary as you think. For example, a comprehensive glass damage may not increase your rates. A small collision claim you had to make because of someone hitting your parked car may not increase your rate at all if your insurer can collect the costs from third party insurer or increase very little if it was hit and run.
How Much Does Insurance Go Up after a Minor Accident?
This question is partly answered already above. General view is that small fender bender in a supermarket car park shouldn’t increase your insurance a lot if you have otherwise a long driving and clean history. Largely accepted limit that determines if an collision is minor or large appears to be $2,000 claim threshold. Actually, $2,000 is small enough for many people to pay out of pocket, especially in view of deductible. This may be the best solution to keep your record clean.
Effects of Several Small Claims on Your Car Insurance
However, recently people complain about non-renewals after a small claim. This happens when you have already had several others and the last accident was the last straw that broke the camel’s back. This brings us to the next issue of how was your driving records before the last accident. If it was admirable you may still get away with slight premium increase after one case. As mentioned above you may see huge increase if it was another one in the series of claims you have been making.
What Is an Unreasonable Insurance Increase After an Accident?
As you can see there are a lot of factors to consider before auto insurance companies decide on your new premium after a claim. Also, you have alternative options in the form of other insurers if you see a large jump on your premium. Every company has a different view of the same event and interpretation of risk. Things are a lot more complicated now with all the additional factors considered by insurers.
If it is allowed in your state, many companies look at financial indicators like your credit score, marital status, home ownership and job title along with your driving record. Therefore, if you see a large increase after one claim you should check other companies to see if other indicators will counteract against the premium increase. Your current insurer may have offered you large savings for clean history. This would be great and you would enjoy those rates as long as you have no incident to report. As soon as you have one you would lose them. You should now look for companies that don’t rely heavily on past experience and offer large discounts for the characteristics you have like homeownership and good credit.
How Does Accident Forgiveness Work after the First Incident?
If you have accident forgiveness coverage in your policy one at fault crash may not affect your renewal premiums at all. Accident forgiveness is bought for exactly this reason. When you have a clean history you want to protect it just in case you may have one unlucky incident. Then, your insurer would note the crash on your record but have already promised not to increase your premium after the first at fault claim. Check if you have this coverage.