How Does an Accident Affect Your Auto Insurance Rate?
How Long Can an Accident Affect Your Insurance Rate?
Shanti
9/1/20263 min read
How Does an Accident Affect Your Auto Insurance Rate?
One of the first concerns drivers have after an accident is: “Will my car insurance become more expensive?”
The short answer is: it might, but not always.
The impact of an accident on your auto insurance premium depends on several factors, including who was at fault, the amount of damage, the type of claim filed, state regulations, and how the insurance company evaluates risk.
What Happens If You Are At Fault?
Accidents in which the driver is considered at fault generally have the greatest likelihood of increasing the insurance premium.
When your policy renews, the insurance company may consider your accident history and the amount paid for the claim when evaluating your risk.
The more serious the accident or the more accidents and violations a driver has on their record, the greater the potential impact on the cost of insurance.
Can Your Insurance Increase Even If You Were Not at Fault?
This may surprise many drivers. Yes, in some situations, even a not at fault accident can affect your insurance rate.
However, the impact is usually different from an at fault accident, and state regulations and the insurance company’s rating practices can play an important role.
For this reason, you cannot assume that every accident in which you were not at fault will increase your premium. At the same time, there is no guarantee that it will have no effect at all.
What About Comprehensive Claims?
Not every auto insurance claim involves a collision with another vehicle. Examples include:
• Vehicle theft
• Vandalism
• Fire
• Broken or cracked glass
• Hitting an animal
• Damage caused by certain natural events
These types of losses are generally handled under comprehensive coverage.
Filing a comprehensive claim may also affect future insurance rates in some circumstances, although these claims are generally evaluated differently from at fault accidents.
How Long Can an Accident Affect Your Insurance Rate?
Insurance companies typically review several years of a driver’s accident and claims history when determining rates.
However, there is no single time period that applies to everyone.
How long an accident remains relevant to your driving history or an insurance company’s rating process can depend on the state, the insurance company, and the type of accident.
As a result, two drivers involved in similar accidents may not experience the same impact on their insurance premiums.
What Is Accident Forgiveness?
Some insurance companies offer a feature called Accident Forgiveness.
If you qualify, Accident Forgiveness may prevent your insurance rate from increasing solely because of a specific accident.
However, the rules vary among insurance companies. Some insurers offer it after several years of accident free driving, some may provide forgiveness for smaller claims, and in other cases it may be available as an optional feature that can be added to the policy.
Before purchasing auto insurance, it may be helpful to ask: “Does my policy include Accident Forgiveness, and exactly when does it apply?”
What Should You Do After an Accident?
Your first priority should always be everyone’s safety.
After that, contact the police when appropriate, exchange information with the other driver and obtain their insurance information, take photos of the scene and any damage, and report the accident to your insurance company or agent within an appropriate timeframe.
Keep all documents and information related to the accident. Determining responsibility and how the claim is filed can be important during the claims process.
One Important Thing to Consider Before Buying Auto Insurance
The price you pay today should not be the only consideration when choosing auto insurance.
Two policies may have similar prices today, but insurance companies can differ in how they handle claims, Accident Forgiveness, accident history, and other factors.
So when comparing auto insurance, instead of asking only: “Which insurance is cheaper?”
It may be better to also ask: “If I have an accident someday, how will this insurance protect me, and what could happen to my policy afterward?”
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