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Why Does Insurance Go Up After An Accident?

If you're in a car accident, you may see an increase in the amount you pay per month for your car insurance. Many different factors come into play when insurance companies consider a car insurance premium increase for the drivers they insure.

Myth or Fact?

While many drivers believe car insurance premiums automatically increase after they make a claim, even when the incident is not their fault, this is not always the case. If you’re involved in anything from a chipped windshield to a head-on collision, don’t be afraid to call your insurance company just because you think you’ll get stuck with a higher monthly payment. Instead of using a blanket system for raising rates after someone files a claim, insurance companies take many different factors into consideration when determining if and how much they may raise your premiums.

Many states have regulations and legislation that don’t allow insurance companies to raise premiums if you are not at fault. This may also be true if you file a claim under comprehensive coverage.

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Risk Aversion

Insurance companies are averse to insuring at-risk drivers. This is why your insurance could go up after an accident.

Even if you are involved in an accident that isn’t your fault, and especially if you have filed many claims in that way, the company may see you as a high risk driver. It may make them think the way you drive makes you more prone to being hit by another driver and therefore, you are still a risk to insure, though not at fault. Also, some companies have statistics to demonstrate that a driver who gets into one auto accident is more likely to get into another of equal or greater severity. To avoid or mitigate this risk, your insurance company may raise your monthly rate, regardless of who’s to blame.

How Severe the Incident Is

Every claim is different, and the severity of the situation plays a major role in how insurance companies process it. If you need a replacement windshield or someone dings your car in a parking lot is much different than if you’re involved in a major car wreck where you’re in an at fault accident. If the incident is less severe, and particularly if it’s not your fault, then you have a chance at avoiding any increase in your premium. If it is severe and your fault, the insurance company may consider you a risk, and you may see a car insurance premium increase as a result.

many drivers believe car insurance premiums automatically increase after they make a claim, even when the incident is not their fault, this is not always the case.

Your Driving History

If you have an impeccable driving record, filing a claim for a minor accident may not automatically mean an increase in your premium. If you rack up speeding tickets and are often involved in incidents, particularly those involving claims, you are seen as a risk by insurance providers and your premium is more likely to increase. Insurance companies prefer safe drivers, so the better driver you are, the less of a chance your car insurance will increase. It helps to be a safe driver, and to keep a clean driving record, this can help lower your auto insurance policies.

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Your Fault, Their Fault, No-fault

In some cases, car insurance premiums can increase even when you are not at fault. But many providers don’t want to penalize you just because you were an unlucky victim. Whether you’re rear ended in a parking lot or T-boned at an intersection, with the other driver at fault, you may not see any adjustment to your monthly insurance payments.

However, if you are the at fault party, the risk to insure you increases, and so may your insurance premium. Nevertheless, the severity of the incident often dictates how much the increase might be. If it’s a minor fender bender, you may not see as much of an impact on your premium as if you were driving recklessly or while intoxicated.

In a no-fault situation, both insurance companies likely have to pay at least a portion of the auto insurance claim, regardless of whose fault it really was. In this case, your premium may increase, though this is determined by the severity of the incident and your driving history.

Other situations may not involve other cars or drivers at all. For example, if debris that fell off a truck smashes into your windshield, your auto insurance company may see this as an unavoidable incident, cover it with comprehensive coverage, and not raise your premium. However, if you ran over debris and damaged the car by your own actions, the company may use collision coverage for the incident and raise your auto insurance rates.

Accident Forgiveness

Many companies now offer an accident forgiveness program as part of their car insurance packages. If you file a small claim, accident forgiveness may prevent you from seeing any premium increase. You may pay more every month to have this feature, but it could be worth it if you experience any small incidents you need to file a claim for.

With all of these factors in mind, you may or may not see an increase in your car insurance premiums when filing for a claim. Most importantly, always let your insurance company know if there has been an incident. If you don’t, your insurance company can find out in other ways, such as if a police report becomes public record, and this reflects poorly on your status as an insured driver.

If you are frustrated with your current insurance provider because your insurance premiums have increased, give us a call, and we can help you find the insurance policy that is best for you.

Before making any final decisions on your insurance company, it is important to learn as much as you can about your local insurance providers, and the coverages they offer. Call your local insurance agent to clear up any questions that you might have. Questions to consider asking include, “What is the best coverage plan for me/my family/my situation?” “What are the minimum coverage requirements in my state and what form of coverage do you recommend?” “Do you guys offer any bundle discounts if I take out both my auto insurance and home insurance with you?” and “What is the average rate of insurance quotes you guys offer?”

Before making any big insurance decisions, use our free tool to compare insurance quotes near you. It’s simple, just plug in your zip code and we’ll do the rest!

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