Even if you are not at fault in an accident, it may still increase your premium 10% on average, according to the CFA study. If your car insurance company ends up paying for your damages, they are most likely to increase your rates as it costs them money. But the increase will not be as much as an at-fault accident. Whose insurer pays for your damages, size of the claim, the company you are with, your state, whether you have accident forgiveness or not and your driving records are some of the factors that affect if you would see premium increase and how much.
What happens to your insurance rates after a no-fault accident depends on who ends up paying for the damages at the end. If the other party is deemed to be fully responsible or accepts fault for the accident and agrees to settle, this would save you a lot of hassle. Once the fault is determined, you can submit your claim to the at-fault party’s insurer. If they pay for your losses and your provider hasn’t paid a dime, there is no reason why your car insurance rates should increase.
If your damages are not being paid or the other side is unresponsive, you may need to make a claim on your own Collision coverage. Once your own insurer compensates for the losses, they may go after the liable drivers or their carriers. If they can successfully recover the money they spent, the accident can go down as no claim on your policy. In such cases, you would be refunded your collision deductible as well since your carrier will be able to get it from the other side. This outcome would be a relief and your vehicle insurance premium isn’t likely to be affected much, if at all.
Why Insurance Rates Go Up after No-fault Accidents
Every incident has the potential to cause premium increase, which can be small or large depending on circumstances. If you are not getting the discounts you used to get, it means rates are probably affected by the recent accident. Even though you are totally innocent in this, the underwriter will still have to consider the fact that they lost money if they cannot recover the collision claim they paid from third parties in the above scenario.
The situation is totally different in no-fault states where you may not be allowed to claim on third parties for some or all of your costs. Then, your insurer will have to cover it even though you were totally innocent and it will potentially increase the premium. Who was responsible is still determined even though it won’t matter in terms of settlements. Therefore, how much the renewal quotation will go up may still depend on who was liable for the crash.
Furthermore, all parties involved in a vehicular crash may be comparatively at-fault. You may not be the person who caused it 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 the state 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 the incident can be considered material. If your car insurer ends up settling even a small portion, they will put auto insurance rates up accordingly.
How Much Does No Fault Claim Affect Insurance?
According to the Consumer Federation of America study, a no-fault accident increases car insurance rates 10% on average. The study finds that while some companies don’t increase the premium at all or increase a little, others can increase as much as 16% after a no-fault accident. If you have just had an accident, you may have to wait for your renewal quote to see what happens and take it from there. There are several factors affecting premiums after a vehicular accident and they are discussed below.
Your vehicle insurance rates should stay the same when a third party or their auto insurers pay for your damages fully. Even though your provider may know about it, this is an incident that shouldn’t concern them because they are either not involved or recouped their money at the end.
If you end up applying to your own insurer for the damages even if it was someone else’s fault and they couldn’t claim back on any third party, your insurance premium is likely to go up. This may be the case when it is a hit and run incident or the other driver has no insurance. The following factors will be influential as to how much;
- The Size: Smaller claims of under $2,000 usually affect rates less. The amount of money paid out does affect underwriters’ decisions as to how much to put auto insurance rates up.
- Number of Previous Claims: If this comes after several claims, it is difficult to explain that the latest one was just an unfortunate case of wrong place wrong time. Usually, the first one is considered a bit more leniently while the consequent claims can be costlier.
- Driving Record: If you are a teenage driver the premium may be affected even if it was a total no-fault collision. They can be more lenient if you have been driving for a long time and have a clean record.
- The State: Local laws can prevent or allow companies to apply surcharges or offer discounts in certain cases. Also, nearly all claims will affect vehicle insurance rates if you live in a no-fault state as explained above.
- Your Insurer: Every company has their own way of rating premiums and claims. While one company may not increase your rate even after they end up paying for an accident that wasn’t your fault, other companies may increase your rate a lot.
These are the moments some companies take as their chance to shine and come to help. In the same way, it is an opportunity for you to see how good they are in dealing with issues. If you see an unreasonable car insurance premium hike after a no-fault accident you should remember that there are plenty of companies in your zip code to get quotes from and compare.