If you’re reading this, you may have been in a car accident.
I am sorry to bring you more bad news, but even if you weren’t hurt, the next time your car insurance is up for renewal, you might feel some pain in your pocket.
How much does car insurance cost increase after an accident?
Car insurance companies frequently raise premiums for drivers who have recently been in an accident, but this is not always the case.
However, if you’re at fault or your insurance company believes you’ve been in too many accidents (even if none were your fault), your premium will almost certainly rise.
In fact, it could more than double.
According to a recent Forbes Advisor analysis, average premium increases for accidents with property damage are 45% and 47% for those with injuries are 47%.
Similarly, Insurance.com found a 52% increase in national average rates after an at-fault accident in 2022.
These premium increases typically in the last three years.
Before you freak out, here are some advice on how to keep your car insurance costs down after an accident.
1. Contact your Insurance Company First
Car insurance premiums are determined by a variety of personal factors, including your age and driving history.
Moreover, your unique surcharge, which is the fee added to your premium after an at-fault accident.
It may also follow a ticket, late payment, etc
It can vary depending on a number of factors, such as your specific insurance company, the state you live in, and the intensity of the accident.
As a result, after any type of accident, no matter how minor, you must contact your insurance agent immediately to determine how it will affect your premium.
This relieves the stress of receiving an unexpectedly large bill in the mail and allows you and your budget to adjust according to it.
2. Find a Forgiveness Clause for accident for yourself
According to the auto industry, most drivers will have three to four accidents in their lifetime.
Because some insurance companies came to accept that accidents are unavoidable, many are willing to overlook your first mishap and not raise your premium.
This is where an accident forgiveness clause can help.
It is an add-on to your policy that guarantees your premium will not increase after your first accident.
The catch, of course, is that it has to be part of your policy already.
You can’t get into an accident and then ask for it to be added on.
However, it is possible that you already have an accident forgiveness clause and are unaware of it. So keep an eye on that!
Just keep in mind that it is not a guaranteed way out of prison.
Accident forgiveness has limitations, such as being valid for only one accident per policy (not per driver on the policy).
Moreover, even if your insurance premium does not increase, the accident will remain on your driving record.
In the future, insurance companies may see and adjust your rate accordingly.
It’s also not available in every state or offered by every Company.
3. Search for a New Policy
If you’re still dissatisfied with your renewal rate, use our resources to find a new car insurance policy.
In fact, whether you’ve been in an accident or not, sometimes, it’s a good idea to browse competitor sites for a lower premium.
Also Read: 10 Biggest Life Insurance False Myths
Insurance rates change frequently, so sticking with the same company year after year may prevent you from saving money.
In general, you should compare quotes before renewing your policy and whenever you undergo a significant life change such as purchasing a new car, add or remove a driver from your policy, or you change your state, You will not be penalised for changing policies on a regular basis, but do your homework before making any changes.
Also, inquire about any cancellation fees. Because they can hurt to some people. 😋
Here are a few things to keep in mind as you search:
1. Bundle your home and car insurance
Premiums vary greatly between companies, but if you have home insurance with another company, include it on your list of potential car insurance companies.
By “bundling” your home and car insurance with the same company, you can save money.
2. Pay close attention to the company’s repute
When making your final decision, keep in mind that money should not be the only consideration. “Select an insurance company that has a reputation for good customer service and is financially stable” advises Worters.
3. Make use of a policy aggregator.
Companies such as Policygenius and Credible can assist you in finding a new policy by comparing personalised quotes from multiple insurance providers all in one place.
Nowadays, There’s no need to go from site to site looking for the best deal.
4. Inquire about your insurer’s loyalty discount.
Ask your current insurer if they offer a loyalty discount before you commit to a new policy with a different insurance provider.
Obviously, cancelling your coverage will disqualify you from receiving this benefit, so make sure you understand what you’re giving up before making the switch.
5. Inquire about a cancellation fee
Some, but not all, auto insurance companies charge a fee if you cancel your coverage before the policy expires.
It’s more likely that you won’t be charged, but check with your provider before making any changes.
Finally, wait until your at-fault claim is resolved before considering switching insurance providers, and be honest about your driving history when searching.
Potential insurers will request information about any accidents or moving violations you’ve received in the last few years.
Don’t tell any lies!
In their databases, they will find all reported accidents or tickets. So they know everything…
4. Raising your deductible
If your insurance company raises your premium, you can still reduce the amount by raising your deductible (the amount you must pay after filing a claim and your insurance kicks in).
According to the Insurance Information Institute (III), raising your deductible from $200 to $500 could reduce the cost of your car insurance coverage by 15% to 30%. Increasing your deductible to $1,000 can save you 40% or more.
But, before you do so, make sure you have the $500-$1,000 to spend if you have another accident.
This is a good reason to start saving for an emergency.
5. Take advantage of other discounts
Insurance companies provide a wide range of discounts to their customers, but you must ask if you want to take advantage of these benefits.
The following are some of the most common auto insurance discounts:
1. Low-usage discount
If you drive infrequently, you may be eligible for a low-mileage, low-usage discount (note this type of discount typically requires you to sign up for a driver monitoring technology).
2. Loyalty discount
If you’ve been a long-term customer, your insurance provider may reduce your rate.
3. Affiliation discount
Certain discounts may be available to students, military personnel, and senior citizens.
Many insurance companies also have affiliations or partnerships with specific universities or trade organisations, so you may be eligible for a discount based on your school or employer.
4. Multi-car discount
If you own more than one vehicle and insure them all under the same policy, you may be eligible for a multi-car discount.
5. Billing discount
Some auto insurance discounts are available based on how you pay for your coverage, such as if you pay your policy in full and/or sign up for electronic billing.
6. Safety features discount
Your premium may be affected by the type of vehicle you own and the features that come with it.
Inquire with your provider about discounts for anti-theft devices, anti-lock brakes, safety features such as airbags and seat belts, and new vehicles.
6. Decrease your coverage
Three out of every four drivers buy collision and/or comprehensive insurance, but that doesn’t mean three out of four should.
Reducing your coverage is a simple way to significantly lower your premium, but it is not recommended for all drivers.
Here are some reasons why you should think about dropping your collision and/or comprehensive coverage:
- The additional premium for comprehensive and collision coverage exceeds 10% of the book value of your vehicle.
- You own an older, fully paid-for vehicle.
- You have enough money saved to replace your car if it is damaged in an accident.
- You aren’t concerned about the following threats because of where you live, work, and drive weather-related damages, animal-related accidents, and auto-related crime.
Here are some reasons why you should keep your collision and/or comprehensive coverage:
- If your vehicle is financed or leased, your lender will almost certainly require collision and/or comprehensive coverage.
- You have a new vehicle that you cannot afford to replace if it is damaged in an accident.
- You are concerned about one or more of the following threats based on where you live, work, and drive: weather-related damages, animal-related accidents, and auto-related crime.
- You live in a state with a high proportion of uninsured motorists (FL, MS, NM, MI, TN, AL, WA, IN, AR, D.C.).
7. Attend a driving class
When you were 16, you probably thought you’d seen the last of driver’s education.
However, if you dust off your old notebooks and take a refresher driving course, your insurance company may see this as a sign that you want to improve your driving skills and they may be kind to you when it comes time to renew.
“It won’t help if you were caught driving recklessly or while impaired,” Worters says.
However, it may help reduce rates. Do not wait for your insurance company to request this. Do it on your own and inform them.
Accidents that are chargeable vs. unchargeable
Although a car accident will almost certainly increase your insurance premium, it may not.
The circumstances of your accident are important, and certain types of accidents should not affect your insurance rates.
The following incidents are likely to result in a higher premium:
- You were at fault for the accident, which resulted in property damage.
- You were at fault for the accident, which resulted in injuries.
- You have previously been involved in additional car accidents (the fault is often irrelevant if you have multiple accidents on your record).
The following incidents are unlikely to have an effect on your premium:
- Your vehicle was hit/damaged while it was legally parked.
- You were hit from behind by another vehicle but were not ticketed.
- Your car was damaged in a hit-and-run accident that was not your fault.
- You are entitled to accident forgiveness (varies based on your insurer and policy).
- The accident was minor, not your fault, and it was your first on record (varies based on your insurer).
The state in which you live can also affect your premium after an accident.
In some states, your premium can rise even if you are not at fault.
In some states, your premium increases only if the claim exceeds a certain dollar amount.
Find out the specifics of your policy from your insurer.
Conclusion
Accidents in cars can be stressful for a variety of reasons.
Your car and/or another vehicle may have been damaged.
You could be suffering from injury or worse.
Unfortunately, when it comes to renew your insurance coverage, you may face another aggravating side effect: a premium increase.
Insurance premiums frequently increase following an accident, sometimes by as much as double your original rate.
You can expect to pay more for your policy if you are the at-fault driver, but your rates may rise regardless of who is at fault.