No one wants to have to file a car insurance claim, but accidents happen, and the reason you have car insurance in the first place is to pay for damage and injuries after a car accident. As long as you have sufficient car insurance coverage, your insurance will cover the costs of the other driver’s repairs or medical bills after an at-fault accident, and can also cover damage to your own car. But will your car insurance rates definitely increase after an accident?
The truth is that making an at-fault claim or having a claim made against you is very likely to significantly increase your car insurance premium, one major insurance company reported that drivers’ rates went up by an average of 28% after an at-fault claim.
The exact amount by which your rates will increase is difficult to predict, and will depend on the severity of the accident, but even making a claim for a not-at-fault incident can impact your rates. Here’s what you need to know about how claims can affect car insurance costs, and what to do if your rates go up.
Will my insurance go up after an accident?
When your current policy term is up for renewal, and you’ve had an at-fault accident and filed a claim during that time, you’ll likely be notified that your rates are increasing. The amount by which your car insurance premiums increase depends on a few factors.
First, there’s the severity of the accident. You may see a higher rate increase for an at-fault accident that cost $20,000 in damage than a fender bender that cost $1,500 to repair. There’s also your past driving history: If you’ve had other at-fault accidents in recent years, or any driving violations, your rates may increase much more than if this is your first at-fault accident in a decade.
Insurance companies calculate premiums based on how much of a risk they think you’ll be to insure, and the specifics of an at-fault accident will matter when they’re figuring out your new rates.
Still, the costs could be significant — one major carrier found that costs increased by an average of 28% after an at-fault claim. So you could potentially be looking at a rate increase that would cost you hundreds more per year.
How does insurance work after a car accident?
Say you’re driving to work and you look down for a moment, not realizing the driver in front of you came to a stop. If you were to slam on the brakes too late and rear-end them, it will likely be determined that you’re the at-fault driver in the accident, meaning your car insurance will step in to cover the costs of the damage you caused.
If you cause an accident, your property damage liability coverage will pay for any repairs the other driver needs as a result of the accident, up to your coverage limits. Your bodily injury liability coverage will pay the other driver’s medical bills, up to your coverage limits. (Don’t forget that you’re responsible for any expenses beyond your coverage limits, which is why you want to set them relatively high in the first place). If you have comprehensive and collision coverage, damage to your own vehicle may also be covered after you pay your required deductible.
After any accident, be sure to follow all the right steps to make sure everyone is safe and every party has all the necessary information to resolve their claims quickly. And don’t panic — this is exactly what car insurance is for. As a quick refresher, here are the basic components of what’s typically referred to as a “full coverage” car insurance policy:
What It Does
Bodily injury liability
The part of your liability coverage that pays for medical bills if you've injured someone in an accident
Property damage liability
The other part of liability coverage, covers the cost of property damage you've caused in an accident
Personal injury protection
Covers medical expenses for you or your passengers after an accident
Covers the costs if you're in an accident caused by a driver with little or no car insurance
Covers damage to your car that happens when you're not driving
Covers damage to your car after a car accident, no matter who was at fault
How long do accidents stay on insurance?
The good news is that accidents don’t stay on your record forever. If you’ve filed a claim, your rates may go up when it’s time to renew your policy. But car insurance companies generally only take the past three-to-five years of your record into account while calculating your rates.
That means that, after a certain amount of time has passed, an accident will “fall off” your record, and won’t be a factor in your insurance premiums any longer, as long as you’ve kept a clean driving record in the time since the accident.
What is accident forgiveness?
One way to insure your rates won’t go up after a claim is to invest in accident forgiveness. Accident forgiveness is an optional policy add-on offered by most major car insurance companies. It’s sometimes included in your rates as a loyalty perk, but with most companies, you can include it in your policy for an extra, usually minimal surcharge.
Accident forgiveness is essentially a guarantee that your rates won’t go up after your first at-fault accident. It can be a good buy for drivers who are willing to pay a little extra for peace of mind. However not everyone is eligible for accident forgiveness — it’s usually only available to drivers who already have a spotless driving history. That means, ironically, that the drivers who would most need accident forgiveness might not qualify.
What factors can impact my premium after a claim?
Whether your insurer will raise your rates depends on your insurance company, the state you live in, and the extent of the damage, but a few other factors can also impact your premium after a claim.
The cost of the claim - Not all claims are weighed the same; a minor fender bender may not increase your premium but a major accident where a vehicle is totaled most likely will
Your driving history - If you’ve gone several years without any accidents or violations, your insurer may not raise your rates for a minor accident. But “high risk drivers,” or drivers with several accidents and violations on their record, may be charged a higher premium
The driver at-fault - When you file an insurance claim, you’re assigned to an adjuster who assesses the damage and determines who was responsible for the accident. Your insurance company may be more likely to raise your rates if you were the at-fault driver
Will my rates go up after a no-fault accident?
Your car insurance can also step in in cases where you’re not at fault. If you’re in an accident caused by another driver, or your parked car is hit, you may still need to file a claim with your insurance company, which may work with the at-fault driver’s insurance to cover your losses.
And yes, as unfair as it seems, having a not-at-fault accident can also raise your rates, but probably not by as much as an at-fault accident. In Queens, NY, drivers saw an increase of $401 in auto insurance rates and residents in Baltimore saw an increase of $258 after a not-at-fault accident, according to a 2017 study by the Consumer Federation of America. At major insurers like Progressive and GEICO, auto insurance rates went up by 10% or more after a no-fault accident, and rates at Allstate went up by nearly 5% after a not-at-fault claim.
It all goes back to the way car insurance companies calculate risk — having any accidents on your record, even if you weren’t responsible for them, can make you riskier to insure in the eyes of the provider, meaning higher rates.
What about comprehensive claims? If your car is damaged by extreme weather, fire, flood, vandalism or theft, you can file a comprehensive coverage claim, which covers damage to your car in all those scenarios.
But will your rates still increase? The answer is, it depends. Some car insurance companies may not raise your rates for comp claims under a certain amount, some may raise your rates minimally.
How can I lower my car insurance after an accident?
So your car insurance rates have gone up after filing a claim, now how can you get them back down again? There are a few ways to try and lower your car insurance rates:
1. Take a driver’s education course
Most major car insurance companies offer a range of discounts that can help you save on car insurance costs. You’re probably already getting some discounts with your current insurer, but see if there are any others you can qualify for.
Most insurers offer a discount for taking a defensive driving course or an accident prevention course, which could help knock a little bit off your premiums if they’ve gone up after a claim.
2. Shop around for new insurance
Shopping around for new car insurance coverage is one of the most reliable ways to save money on insurance costs. If your current insurer informs you that your rates are going up, it might be worth getting some quotes from other insurers to see if you could be getting the same coverage for less. An independent broker can help you compare quotes and ensure you’re getting the right amount of coverage for your needs.
3. Wait it out
As we mentioned above, accidents don’t stay on your record forever. If you’ve just filed a claim for an at-fault accident, your rates may increase, but once a few years pass that accident will no longer affect your rates.
Be sure to do everything you can to maintain a clean driving record going forward so you won’t have to file any more at-fault claims or have claims filed against you.