How Much Do Car Accidents Affect Insurance Premiums?

When drivers get into an accident, their first thought more often than not is “How much will this cost?” Accident affects car insurance in different ways depending  on certain details of the accident and depends on your insurance company.

Not always will there be a negative impact on the premium; however your policy may be non-renewed or increased in rate if the accident is your fault. The increased in rate are typically seen at renewal time.

Contributing Factors:

  • Drivers under the influence of drugs or alcohol? If a driver involved was under the influence, it will be considered a “major violation” and may cause a bigger impact on premiums since it will be in conjunction with a DUI (driving under the influence). Note that this may also cause your license to be suspended.
  • How many accidents within the past 10 years? The number of accidents one is involved also determines impact. Multiple accidents within a certain time frame may cause not just a significant rate increase but possible non-renewal as well.

In most cases and depending on which insurance company you’ve purchased a policy from, car accidents can impact your auto premium for about six to ten years. To completely go away, you would have to go 10 years without another chargeable claim. Some would come down after eight years though.

  • Was it at-fault or chargeable fault? – If you are not considered to be at fault, most likely the rates will not be increased. If you are being at fault, it will impact rates depending on the company’s underwriting guidelines. To determine fault, a police report will usually indicate the at-fault party. Without this, insurance companies may investigate through witness reports and driver statements. Most of the time, if both drivers are found 50% at fault, both would be considered at-fault.

Something to remember: If the damage is not too much, you may think you’re better off paying it out at your own costs. However, by doing so, you are also taking a risk; the other driver may change his mind and sue you. The insurance company may or may not deny the claim for failure to report the accident.

Your rates also increase when you live in an area where accidents are common. Why? Because insurance companies consider factors beyond the driver’s control.

You can increase your deductibles to help alleviate the effect of a rising premium due to an accident; this will allow you to pay more out of your own pocket for any damages that you may incur in an accident.

Some insurance companies will offer Accident Forgiveness coverage for your first accident — only if you qualify. This means that your first at fault accident will not affect your insurance rates. This feature must be purchased prior to the accident and the guidelines for this may differ from one insurance company to another so call your broker to check it for you.

It is only worth noting too that if someone other than yourself is driving your car at the time of the accident, your rates could be affected as if you were the driving the car yourself. Lending your vehicle to someone could also mean lending your insurance too.

Ultimately, the best defense against high auto premiums is to b e safe and a careful driver. Taking extra time and care when driving can save you a lot of money and keep you and your loved ones safe and sound.

If you have more questions or maybe looking for a quote because you recently had an at-fault accident, feel free to call us and we will be more than happy to assist you!