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How a car accident affects your car insurance
Expect higher premiums at renewal time in most states unless you have accident forgiveness.
Updated . What changed?
Many car insurance companies advertise accident forgiveness or attractive rates for safe drivers. However, you might not fully understand your company’s stance on rate hikes unless you call your insurer or deal with a car accident. Before the dust settles and accident claims are paid, know how much more in premiums you can expect to pay.
What's in this guide?
- How does car insurance change after an accident?
- How much does car insurance go up after an accident?
- Compare car insurance after an accident
- Will my insurance rates go up immediately after an accident?
- Case study: Sarah's accident after a claim-free history
- How long will I have higher rates after an accident?
- Other factors that affect car insurance after an accident
- How to get cheap car insurance after an accident
- Bottom line
- Questions about car insurance after an accident
How does car insurance change after an accident?
After an accident, your insurance company may fine-tune your risk profile, which can increase your premium. However, that change depends on who caused the incident in the first place.
- At-fault accidents. Causing an accident with moderate or serious damage will spike your insurance rate. But a minor accident might only bruise your ego as a safe driver instead of raising your premium, especially if you have accident forgiveness.
- Accidents caused by another driver. Companies know you’re not the only driver on the road, but whether your premium increases depends on the situation and your state. Some states allow premium increases for not-at-fault accidents, since these suggest that you drive in accident-prone areas. Other states, like California, have laws that bar insurance companies from increasing rates for not-at-fault accidents.
How much does car insurance go up after an accident?
If you’re deemed at fault and someone got injured, your rates could increase as much as 90%, depending on your state. Most states ding you with an average 20% to 50% increase in your rates. That might mean your $120 monthly premium costs an extra $48 a month or $576 a year after a 40% premium hike.
Average premium increases by accident type
The average yearly cost of car insurance rings in around $1,300 per year. Based on this average, you can expect to pay hundreds more per year after most types of accidents.
|Type of accident||National average rate increase||Rate increase per year|
|Bodily injury claim||50%||+$650|
|Fender bender costing $2,000 or more in repairs||40%||+$520|
Why insurance rates increase after an accident
Regardless of who’s at fault in an accident, you could see your premium increase for reasons beyond the obvious:
- You’re pinned as high risk. After one wreck, your company can reassess you as a risky policyholder, raising your rates in turn.
- Your insurer has a low risk tolerance. Some car insurance companies punish accidents or violations with higher rates at renewal than companies more accepting of high-risk drivers. Once you see your rates go up, you might try shopping around to see if you can find cheaper insurance elsewhere.
- You don’t qualify for safe driver discounts. If your clean driving record helped you save on your premium, an accident could wipe out a defensive driver discount.
- You used up your accident forgiveness. If this perk erased the fallout from a previous accident, you aren’t protected from a rate increase this time around.
Compare car insurance after an accident
Will my insurance rates go up immediately after an accident?
No. You’ll typically see your car insurance rates go up or down at your policy’s renewal because your current term and rates are locked in. Depending on your term length, that could mean you won’t see rate increases for six months to a year.
However, you might see your premium rise sooner if you switch car insurance companies. Your new company will typically factor in your recent car accident to determine your new rate.
How long after an accident can you claim on insurance?
Your state should give you a specific time frame for how long you can claim on insurance, such as two to four years after the incident happened. It’s best to start a claim as soon as you have the majority of the claim information needed, though you might want to hold off until you know the extent of any personal injuries. You may have a harder time proving your claim if you start one too long after the accident, when evidence is swept up and the people involved don’t remember details.
Case study: Sarah’s accident after a claim-free history
Car insurance writer
Our most recent car accident involved a single-car accident where we were at fault — no one was hurt. Our car was totaled and we changed out our sedan for a newer minivan. However, neither my husband or I had filed an at-fault claim in the past five years, which has worked in our favor.
We didn’t see our rates increase until our policy renewed a month after the accident. Because of our claim-free history, we were thankful to see only a slight increase in our rates. The accident has affected our ability to change insurance companies, though, since most give a much higher quote than we currently pay.
How long will I have higher rates after an accident?
Car accidents typically fall off of your driving record in three to five years, unless it’s a more serious violation like drunk driving. Your rates gradually decrease over that time as long as you don’t face any more accidents or violations.
If you switch to another car insurance company, that insurer will ask about recent accident details. Be honest about the accident, so that future claims won’t get denied. Ask your insurance company about your policy’s specifics if you’re unsure.
What if someone is in an accident while borrowing my car?
Most insurance companies allow permissive use of your car, meaning that you can give permission for a friend or neighbor to drive your car while staying covered by your insurance. Your friend’s insurance may serve as secondary insurance if your policy doesn’t cover everything. However, some policies exclude non-named drivers, so you should check your policy before you lend out your car.
Other factors that affect car insurance after an accident
An accident may or may not work against you, depending on what happened. Companies take several factors into account after an accident:
- Who’s at fault. No need to sweat too much about an accident you didn’t cause, though you could see a small insurance premium increase.
- Accident forgiveness. Many companies give grace to drivers with a record of safety. That means your premium could go unscathed for the first accident after a long accident-free run. But this perk may be an upgrade you’d have to pay for with some insurers.
- Previous driving record. You might see a bigger surcharge than drivers with a claim-free record if you have another recent incident on file.
- Length of driving record. Some insurance companies look at your driving history from as long as five years ago. A new driver with a big accident will typically face a bigger penalty.
- Safe driving discounts. Losing discounts for safe driving and a claims-free history could translate into a higher cost.
How does accident forgiveness work?
If your insurance policy comes with accident forgiveness, you may not see rate hikes after your first at-fault accident.
However, this perk depends on the specific terms of your policy. Some companies offer accident forgiveness after going claim-free for a set number of years. Plus, if you experience a serious accident or violation, accident forgiveness may not safeguard you from high insurance rates or a denied policy at renewal.
Once your company applies accident forgiveness, you lose the ability to use this perk again for as many years as your insurance company requires. Any driver who cashes in the perk renders it unavailable for other drivers on the policy.
How to get cheap car insurance after an accident
You can lower your car insurance rates in several ways, even if you’ve been involved in an accident:
- Ask about accident forgiveness. You might be eligible even if you thought you weren’t, especially if it’s a free perk.
- Pay for minor fender benders yourself. The general rule of thumb is to not make a claim if the cost is less than your deductible or if other people weren’t involved in the accident.
- Take a safety course. Show your insurance company that you care about safe driving, and you might receive an extra discount.
- Compare other companies. Your current company might not have the best rate available for your not-so-pristine driving record. You might wait on comparing companies until after your rate increases at your next renewal date.
- Consider a pay-as-you-go policy. If you’re a safe driver with a downturn of luck, consider a telematics policy from companies like Root to track your driving. This option helps you by accounting for your current safe driving habits, relying less heavily on other factors.
- Aim for new discounts. Look for new ways you can save money on your policy, such as bundling your car and home or car and renters insurance.
How to switch car insurance after an accident
Although your rate increase happens automatically, you can follow these steps to make sure you’re getting the best rates for your needs:
- Change coverage levels or delete coverage you don’t need through your customer account online or with a customer representative by phone.
- If applying for a new policy, enter your personal and vehicle details to receive quotes.
- Compare quotes across several comanies, looking for the best value compared to cost.
- Choose your policy and coverage, then finalize your information and payment details.
- Call your current provider to cancel coverage after buying a new policy. You may be responsible for an early cancellation fee.
Accidents happen, costing you in significant insurance premium spikes. However, the impact of an accident on your rates depends on who’s at fault, your driving record and your insurance company’s accident forgiveness policy. Take control by comparing your car insurance options for the best rate and coverage.
Questions about car insurance after an accident
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