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UPDATED: Aug 7, 2019
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Car accidents can definitely contribute to car insurance rate increases. If you are involved in a car accident and your car insurance company has to pay out a claim, you will often be regarded as a higher risk driver as a result.
There are a number of factors which will determine how much the impact will actually be the next time your policy is up for renewal.
To learn about these different factors, read below. Also, be sure to enter your ZIP in above for a FREE car insurance rate comparison!
How do I know if my rates will go up due to an accident?
When you apply for car insurance, insurance companies use your complete driving record when determining the cost of your insurance premium. One of the main factors involved in calculating the premium is whether or not you have been involved in any accidents.
If you have been in several accidents or even one accident that was your fault, your insurance premium is most likely higher than someone who has not been in an accident. This is because, if you do have accidents on your record, you are considered a high-risk driver.
High-risk drivers cost insurance companies more to insure, and you end up paying those extra costs in order to obtain insurance.
When to Expect Minimal or No Change in Car Insurance Rates
If you are involved in a car accident that is not your fault, you should expect to have little or no change in car insurance rates.
If the other party was found to be at fault and his or her insurance company took care of the losses involved, your company will not impose higher rates on your policy.
If you are not at fault in the car accident, but your insurer has to pay out claims, you may find that there is a minimal change in your car insurance rates. Most companies will forgive this type of claim although some will increase rates slightly, especially if the payout was hefty.
Some of the situations in which your policy may need to pay out even though you are not at fault include: accidents with uninsured or underinsured individuals, animal collision accidents or hit and run accidents.
When to Expect Significant Change in Car Insurance Rates
If you are involved in an at-fault accident for the first time in a three year period you should expect to see a significant change in your car insurance rates when the time for renewal comes.
If the accident is a serious one, you will definitely see a difference in your rates. However, if you have an otherwise good driving record and are involved in a small fender-bender, some insurance companies will give you a break by not increasing your rates.
This is not the norm as most companies charge for every single accident.
If you have been in more than one accident, or have a combination of traffic tickets and accidents over the past 3 years, you will see more significant change in your car insurance rates.
This is because you are doing things that put you further and further into the risky category of drivers to insure.
When to Expect Major Changes in Car Insurance Rates
If you have multiple car accidents, your car insurance rates will majorly increase. If you have been involved in accidents that also resulted in serious charges such as DUI or reckless driving, expect major changes to your car insurance rates.
Such accidents combined with criminal charges will put you into the high-risk category of drivers. This will mean that your insurance rates will triple in price or even more.
If you find that your car insurance rates have increased because of a car accident or any other reason, it means that it is time to shop around for a better price. When researching insurance companies, look for these things:
- Accident forgiveness – Some companies do indeed offer accident forgiveness and will be able to offer you a much better price than your current insurer is offering.
- Discounts – Other companies may not offer accident forgiveness but have other guidelines for underwriting and other discounts that are more favorable for you.
- Customer reviews – Make sure you take the time to check into the customer service record of the insurer and its financial stability before you take out a new policy.
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What is accident forgiveness?
Accident forgiveness is an incentive program that many insurance companies are using today to either bring in new customers or provide incentive for current customers to stay insured with them.
Accident forgiveness allows you to avoid having your premium increased if you are in an accident.
While this might seem like a nice benefit, remember that the accident is still on your driving record with your insurance company and, if you ever switch companies, the accident is still on record.
Additionally, insurance companies may offer accident forgiveness to parents of young drivers as an incentive to switch to that insurance company.
Is there a cost associated with adding accident forgiveness to my policy?
Depending on the insurance company, accident forgiveness can either be part of the basic insurance policy, or it might be included as an add-on feature.
Unfortunately, with the rise of staged auto accidents throughout the country, more and more insurance companies are forced to make programs like accident forgiveness an add-on that increases cost.
Staged accidents are fraudulent actions by individuals that pretend they were involved in an accident so they can collect the insurance payout.
Remember to always compare the different premiums that auto insurance companies are quoting.
Doing this will help you because a company that is offering accident forgiveness might have a higher initial premium than a company that does not offer the benefit. You must weigh whether having accident forgiveness is worth the additional insurance premium cost.
Am I eligible for accident forgiveness if I have a poor driving record and history?
Getting accident forgiveness on your car insurance policy depends on the type of driver you are and how long you have been insured.
Typically, if you are switching over to a company that is going to offer you accident forgiveness, you must have had a good driving record for at least the last 36 months.
Even if you are switching policies and were attracted to a specific insurance company because it offers accident forgiveness, make sure you qualify before dropping your other coverage.
As far as customers trying to get accident forgiveness with their current insurer, here are some general qualifications:
- Loyal customer – it is necessary to have been with your insurance provider least a year.
- No accidents on record – In addition, a clean driving record is also required.
- Clean driving history – Some car insurance companies will also look at your complete driving history and not just your accident history. This means if you have a moving violation such as a speeding ticket, you may not be eligible for the added benefit of accident forgiveness.
Do all the accident forgiveness plans operate in the same way, or are they different depending on the insurer?
The accident forgiveness program will differ from one insurance company to another. Here are examples of these differences:
- Some insurance companies will require you to have been a customer for a certain amount of time with a good driving record before giving you the benefit of accident forgiveness.
- Some companies will use accident forgiveness as an incentive to switch companies.
- Others will only allow one accident to be forgiven.
- Still others will allow multiple accidents to be forgiven depending on your individual circumstances.
Should I get accident forgiveness?
The option of adding accident forgiveness to your policy depends on your personal preference. If you are looking to save money on your premium, then you may not want to add the coverage because it could cause your premium to increase.
If you are worried that your premium will go up because of an accident, then you should add the coverage. Be sure to compare all your different options and look at what type of coverage you need before insuring or changing insurers.