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How much does a car accident raise your insurance?

No one ever wants to plan for an upcoming rate hike following an accident. Unfortunately, the odds are that you will have a car crash about once every 17.9 years as an average driver. This means that anyone who earned their license by the age of 18 can expect to be dealing with a collision claim by the time they are 35. Add in the fact that the average person will have between 3 and 4 accidents in their lifetime, and you can see why it is so important that you learn how a vehicular crash can affect your rates in the future. If you are looking for a policy, start comparing car insurance rates now by using our FREE tool below!

It is a common misconception that whenever you have an accident you are going to have to budget to pay more every month for your coverage. While there are many scenarios where an accident will result in a premium surcharge, that is not always the case. If you really want to prepare yourself for the financial blow that can come following an accident, read this guide on car insurance premiums following an accident and get the honest and straightforward information that you need.

Car Insurance and Risk

It is only natural to think that a carrier can only penalize you for an accident when they paid out for a claim. Unfortunately, this is not how auto insurance rating works. When a prospective individuals decides that they would like to apply for coverage, the company is going to take an application and then assess the application in a process that is called underwriting. When an application is being underwritten, the company will determine how much risk an applicant and the drivers in their home presents.

A policy will be classified as either a Preferred, Standard or High risk. Preferred risks come with the lowest rates because the likelihood of a claim being filed in the future is the lowest. Many different factors are considered during the risk assessment process:

  • Lifestyle
  • Usage
  • Vehicle type
  • Experience
  • Driving record (most important)

Why do prior car accidents affect car insurance rates?

Driving record is so important because it gives the insurer a good idea of how responsible you are behind the wheel. You might claim that you are an excellent driver who is defensive and stays focused on the road. While this might be true in your eyes, to the insurer the fact that you have an at-fault accident within the last 2 years is a sign that you might pose more risk than someone who is accident-free. The company does not need to have paid for damages reported in the accident to charge you in the form of high rates. This is why it is important to shop rates when you are trying to find bargain-priced plans.

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How far back can a company charge you for an accident?

A collision or personal liability claim will not affect your rates for life. Luckily, insurers can only look so far back before a claim will drop off of your record. State laws vary, but most states will only give a licensed insurance carrier the opportunity to surcharge for a chargeable claim for a period of 36 months. There may be some states that allow a carrier to look further back for accidents that resulted in injury or for Good Driver Discount purposes.

When will your rates go up?

If you file a claim for a loss, you might be surprised to find that your premiums the following month did not go up. If you stay with your existing insurer, the company cannot legally review your driving record or surcharge your rates until your next renewal comes. This means that you will pay your lower, accident-free rates for the remainder of your term. When your renewal bill comes, the accident surcharge will show up if the accident was found to be chargeable and if the claims investigation is complete.

According to researchers, after averaging the premiums, the average policy will go up 41% after a single claim.

If you decide that you would like to buy insurance with another carrier in the middle of your term, the new carrier can run your Motor Vehicle Report and your Claims History Report and find the claim that you filed. Since you are buying a new policy, the claim can be considered when calculating your rates. This is why many people will wait until their renewal to shop around.

When is an accident chargeable?

The age-old question is when will an accident affect your rates. There are so many instances where an accident will lead to a surcharge, but there is also the possibility that the claim you filed will have no negative impact at all. Here is the basic guidelines around chargeable claims:

  • Comprehensive claims are not chargeable because they occur when a vehicle is parked or when something out of your control happens.
  • Some companies will waive the first at-fault accident when you are an experienced driver.
  • Many states have threshold laws that state that damage must exceed a dollar amount before the accident can be chargeable.
  • If there is shared fault, insurers can only raise rates if their client was 51% or more at fault.
  • When no other vehicle is involved for a collision loss, you are at fault.
  • If you file a collision claim because of an uninsured motorist loss, the loss is typically not chargeable.

How much will a chargeable accident cost you?

How much an accident claim will cost you depends on a long list of factors. There is not just a magic figure that is used to assess a rate increase following a loss. Instead, the carrier will review the age of the driver, their years of driving experience, how many tickets they have, how many prior accidents they have, the type of vehicle they drive, and what coverage is carried.

If you want to price what your rates would be with an accident, you can easily use a comparison tool online and enter in a hypothetical loss. Start comparing car insurance rates now by entering your zip code in our FREE tool below! This will give you a general idea of how much you could pay. For those who do have an at-fault loss, these tools will help you find companies with good rates.

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