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How a car accident affects your car insurance
How an accident changes your car insurance rates
When competing for your business, many car insurers advertise generous accident forgiveness policies. But after you choose a policy and end up in an accident, your company’s stance on rate hikes might not be so easy to understand. After the dust settles and claims are paid, know what to expect and how to prevent an accident from ruining your driving record and insurance premiums.
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How does car insurance change after an accident?
After an accident, your insurer may fine-tune how much risk you have for accidents, possibly causing a rate increase. However, that change largely depends on who caused the incident in the first place.
- At-fault accidents. An at-fault accident with moderate to severe damage will probably spike your insurance rate. However, a minor accident might just bruise your safe driver’s ego rather than up your premium.
- Accidents caused by another driver. Companies know you’re not the only driver on the road. So you won’t take a hit for someone else who doesn’t drive as safely as you do.
How much does insurance go up after an accident?
Many factors figure into how much your insurance premium might go up after an accident, including your driving history, the cause of your accident, the severity of the outcome and where you live.
For an at-fault accident involving bodily injury, your rates could increase by as little as 11% in Alaska or as much as 92% in California. On average, most states ding you in the 20% to 40% range for accidents you cause. A 30% increase could mean that your $200 monthly premium costs you an extra $60 a month or $720 a year.
Does the type of accident matter?
Yes, your driving record has a significant effect on your rates, but an accident may or may not work against you, depending on what happened.
The severity of your accident also matters. DUIs tend to result in the most severe premium spikes. Crashes that result in injury or death are also among the top of the list for high insurance increases. Claims filed under comprehensive coverage, such as hitting a deer or getting bad gas in your car, might not move the needle at all.
Companies take several factors into account after an accident:
- Who’s at fault. No need to sweat an accident you didn’t cause. But an at-fault accident could do damage to your low insurance rates.
- Accident forgiveness. Many companies include a provision of grace for safe drivers. That means your premium could go unscathed for the first accident after a long accident-free run.
- Previous driving record. You might see a bigger surcharge if you have another recent incident on your record.
- Length of driving record. Although accidents on your driving record go back 3 years, you might have a raised premium for up to 5.
- Safe driving discounts. Losing discounts for safe driving and a claims-free history could translate into a higher cost.
Average insurance premium increases by accident type
The national average cost of car insurance is $1,410 a year. You might expect your insurance to increase by half for a standard car crash, leaving you to pay about $700 extra a year. That figure goes down for less serious crashes.
|Accident type||National average insurance rate increase||Average additional premium cost|
|Bodily injury claim||49%||+$691|
|Fender bender resulting in $2,000 or more in damages||41%||+$578|
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Does fault for the accident matter?
It could, depending on where you live. Most states have laws in place that make it illegal for insurance companies to increase your rates for an accident that wasn’t your fault. But figuring out who’s at fault can be tricky, especially if there are no witnesses or hard evidence.
Even if you file a police report right away, it’s up to the two insurance companies involved to use the evidence they have to determine who’s at fault for the accident. If there’s a dispute and you have collision coverage, you can file a claim with your insurer to fix your car while it hashes out the details with the other party’s company.
In most states, all accidents you’re involved in eventually show up on your driving record, regardless of fault. Except in the case of DUIs and accidents resulting in serious injury or deaths, most accidents are wiped clean from your driving record in three to five years.
What if the accident was caused by someone else driving my car?
In most cases, all drivers who live in your house are automatically covered by your insurance policy while driving your car. So if your spouse is driving your car and gets into a wreck, your insurance policy covers the damages. Unfortunately, it also means your rates will likely increase if they’re legally at fault.
The same goes for a friend, nephew or roommate. Calling it permissive use, most insurers cover damages caused by other people you’ve granted permission to drive your car.
Also most insurance policies cover the car, not necessarily the driver. So if a friend gets into an accident while driving your car, your insurance policy picks up the tab and you suffer the consequences in terms of rate hikes. Your friend’s insurance would serve as secondary or excess insurance if your policy doesn’t cover everything.
Why do insurance rates go up after an accident?
Regardless of fault, after an accident you could see your premium increase for reasons beyond the obvious:
- You’re put in a higher risk pool. Insurers are in the risk business. After even one wreck, your insurer will likely reassess you as a riskier policyholder, raising your rates in turn.
- You’re disqualified for a safe driver discount. If your clean driving record helped you save on your premium in the past, an accident could wipe out that defensive driver discount.
- You’ve used up your accident forgiveness. If this perk erased the premium fallout from a previous accident, you aren’t protected from a rate increase this time around.
What if I have accident forgiveness?
If your insurance policy comes with accident forgiveness, you could be protected from rate hikes after your first at-fault accident.
However, this perk largely depends on the specific terms of your policy. For example, some companies offer accident forgiveness to drivers who have an otherwise clean driving record. If your accident is particularly bad or involves driving while under the influence of alcohol or drugs, it won’t necessarily safeguard you from being dropped by your provider.
If you take advantage of accident forgiveness, you lose the ability to use this perk again for as many years as your provider requires. If your policy includes more than one driver, any driver who cashes in this perk renders it unavailable for everybody else on the policy.
Can I ever get accident forgiveness back?
Yes, but how long you’ll need to wait depends on your insurer. You could be eligible for accident forgiveness again if you avoid accidents or speeding tickets for a specified time. Some insurers allow you to cut down that time by taking a safe driving course. Contact your insurance company to learn what applies to your specific policy.
Accident forgiveness doesn’t keep your accident from appearing on your driving record. If you switch insurers, you could face higher premiums than if you had a clean driving record.
How many accidents is too many?
Racking up car accidents is a fast track to sky-high insurance premiums and possibly a ticket into the high risk driver pool. Typically, two or more accidents within three years is enough to cause trouble with your insurance company, but it can vary by state and insurer.
After a single DUI, your insurance provider can drop you, leaving you to jump through hoops to get insurance and reasonable rates. If you’re in this situation, you might want to focus on high-risk car insurance and filing an SR-22 certificate with the state.
Case study: Sarah’s accident forgiveness
Car insurance writer
Our story is a great testament to how a clean driving history can help you after an accident. Recently, my family got into a single-car accident where we were at fault — no one was hurt. However, neither me nor my husband had filed an at-fault claim in the past five years, which worked in our favor.
Our insurance applied accident forgiveness to our case, and we didn’t have to worry about any premium surcharges. Our car was totaled and we changed out our sedan for a newer minivan. Not only did our premium not go up, it went down because we switched to a different car that was cheaper to insure. We were so thankful that the process was smooth and that our insurance applied the accident forgiveness automatically.
How can I get cheap car insurance after an accident?
If you’re involved in an accident, you have a few ways to position yourself for lower rates:
- Ask if you’re eligible for accident forgiveness. You might be eligible even if you thought you weren’t, especially if it’s a free perk.
- Pay out of pocket for minor fender benders. The general rule of thumb is to not make a claim if the cost is less than your deductible.
- Take a safe driving course. Show your insurer you care about learning safe driving habits, and you might receive an extra discount.
- Compare your coverage options with other providers. Your current insurer might not have the best rate available for your not-so-pristine driving record. However, you might want to wait on shopping around if you haven’t seen a rate increase yet because insurers don’t check your record that often. A new insurer will take that accident into account, though.
- Consider telematics. If you’re a safe driver with a downturn of luck, consider telematics to track your driving. This option allows an insurer to account for risk based on your many safe driving habits.
- Land new discounts. Look for new ways you could save money on your policy, such as homeownership or customer referrals.
- Wait it out. Wait for your driving record to clear after three to five years.
How do I update my car insurance after an accident?
Once an accident occurs, you may see a rate increase on your next policy renewal. Although this increase happens automatically, follow a few steps to update coverage or switch to a new policy, if desired:
- Log into your account or app online to add or delete coverage. You can also call an insurance representative to make these changes.
- If applying for a new provider, enter your personal and vehicle information with a provider to receive a quote.
- Compare quotes across several providers, looking for the best value compared with cost.
- Choose your desired policy and coverage, finalize your information and include payment details.
- If necessary, call your current provider to cancel coverage. You may be responsible for an early cancellation fee.
Accidents happen. And if you’re not careful, they could cost you significant insurance premium spikes. The impact of an accident on your rates depends a lot on who’s at fault, previous driving record and your insurer’s accident forgiveness policy.
Take control by comparing your insurance options to find the best rate and coverage for your driving needs and habit.
Common questions about car insurance after an accident
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