Auto insurance is a for-profit business. The insurance company is not about to voluntarily do anything that will not lead to a profit, including providing benefits to you as it should. It may even raise your car insurance if someone else crashed into you. The question is how much and what to do about it.
If you or a loved one suffered an injury in a car accident, contact a car accident lawyer to review your legal options. You may recover financial compensation if you prove that someone else caused your injury—including compensation for increased insurance rates you may need to pay. Meanwhile, you need to know how the insurance company may react to your accident when it comes time to reprice your policy.
Your Car Insurance Price Reflects on Your Individual Risk
Subject to state regulation, insurers will charge whatever premium they need to have something in it after accounting for the risk of insuring you. Risk is not a set thing; it can change over time based on your driving profile. One significant change in your driving profile is when you are involved in an accident – whether it is your fault or not. Then, you can count on paying more money when your policy is up for renewal.
When you sign up for car insurance, the insurance company will review your driving record and come up with a rate that reflects their view of your risk. The initial rate will be for the duration of your policy. Usually, the length of a policy is six months. After the initial period, the insurance company will review your driving record and other economic factors to develop the new policy rate.
Companies use several factors to determinine your car insurance rates:
- Where you live
- Your history of making claims
- The value of your car
- The age of the driver
- Whether you have tickets for moving violations
- How many miles you drive per month
Car Accidents Will Lead to Higher Rates
Your rates will increase when you are at fault for a car accident. It does not matter whether you were involved in a multi-car or one-car accident. The insurance company will raise your rates regardless. They have paid out money because of insuring you, and they now realize that you may be a greater risk than they had previously thought.
After you have had an at-fault car accident, your rates will likely remain the same until the next time that your policy is up for renewal. The insurance company sets your rate based on their estimate of your risk as a driver. They must charge an adequate amount to cover that risk, knowing that they will be responsible if you are to blame for an accident. One at-fault accident is enough to change their prior assumptions about you.
Accidents Mean Increased Risk for the Insurance Company
Insurance rates come from statistics and probabilities. Insurance companies are in the business of charging to take on risk. The higher the risk a driver poses, the more the insurance company will need to charge. If they underprice the risk for their drivers, they run the risk of going out of business or making no profit whatsoever.
The insurance company has complicated risk management formulas and a staff of actuaries who evaluate you. They are solely concerned with how much the insurance company may need to pay to insure you. The premiums must be adequate to cover this risk and allow the insurance company to make a profit. The insurance company will invest the money you have paid in premiums until called upon to pay a claim.
How Much Your Rates Go up Depends on Many Factors
There is a range of estimates of how much your rates will go up after an at-fault crash. The consensus is that you can expect a hike of up to 50 percent. The insurance company may think that they can make back some of the money they paid out on a claim. Although there is an increased risk in insuring a driver after an accident, the insurance company may also have a profit motive.
The amount that your car insurance will increase depends on several factors. For example, younger drivers may see an even more considerable increase in their premiums after an accident. In addition, if this was not your first accident, you may see an even more significant hike because it may show that you are a dangerous driver. If the car accident resulted from drunk or reckless driving, it can mean an even higher surcharge for your following policy.
In addition, some companies are more aggressive than others in raising rates after car accidents. For example, Progressive is known to jack rates after an at-fault accident by as much as 60 percent. Different companies use different formulas to calculate risk. Allstate lowers premiums by less, but their charges are already higher than average.
Car Accidents Mean Higher Premiums for Three to Five Years
Once an accident is on your record, it will not remain there permanently. Most insurance companies will make you pay higher rates for three years. In some instances, the accident can remain on your record for up to five years. As soon as the accident is off your record, your rates will go down the next time your policy gets renewed. Depending on the state and the insurance company, your premium can gradually decrease when it remains on your record, so long as you do not have another accident.
Accident Forgiveness Could Help Cushion the Blow
Some insurance companies offer accident forgiveness to their customers. Your rates will stay the same after your first at-fault accident. This benefit will save you considerable money after the accident in light of the steep premium hikes. Only some insurance companies offer accident forgiveness. In addition, those companies that offer it can have some fine print that may mean it does not apply to you.
However, you will generally lose the accident forgiveness benefit after the first accident, as the crash will appear on your driving record. Some insurance companies may allow you the right to earn accident forgiveness back if you have a certain period of driving without an accident. If you have an accident in the meantime, you will be subject to a significant rate increase, mainly because the prior accident is still on your record.
Rates Can Go up for Non-Fault Car Insurance Accidents (But Less)
The insurance company may even raise your rates after an accident that was not your fault. Insurance policies are about pricing risk and only partially about evaluating you as a driver. An accident that was not your fault is still a claim for purposes of your claims history. Even if you are a safe driver, you may still be a risk to the insurance company if you are involved in accidents. The more accidents that you are involved in, the higher the chance that you may eventually be in an at-fault accident.
Of course, your insurance premiums will not increase nearly as much when you are not at fault in an accident. Your premium may go up by about 10 percent when you are in a no-fault accident. If you have had to claim your uninsured or underinsured motorist coverage, the increase may be higher.
You Can Compare Prices When Your Rates Go Up
As a driver, you should shop around if your insurance rates have gone up after an accident. Stay calm about loyalty to your insurance company because you can be sure they have no loyalty to you. Changing insurance may save some money when you already bear an accident’s costs. Other insurance companies will still want your business even if you have had an accident. Many drivers do not have a clean driving record, and if auto insurance companies stayed away from drivers with accidents, they will be unable to make any money.
However, you should not skimp on coverage to save a few dollars. If you have another accident, you can end up in the lurch and owe money out of your own pocket if you have insufficient coverage. You want to be careful about getting behind the wheel with the bare minimum of coverage. You may end up paying the price later in exchange for saving a few dollars.
When you are switching insurance coverage, you will need to disclose your driving history. If you do not reveal that you have had an accident, the insurance company will learn when they obtained your driving record. If they had quoted you a lower rate, it might go up when they discover your driving history.
In addition, you can also opt for a policy with a higher deductible, or you may choose to bundle insurance policies. This new policy will shift more of the risk of an accident onto you, and it can be a way to save money. However, there is no escaping the fact that you will need to pay more for insurance after an accident.
Determining Fault After a Car Accident
There are numerous reasons why you do not want to be at fault for an accident. Not only will your car insurance go up if you are at fault, but you will also not be eligible for financial compensation for your injuries. Liability may be uncertain after a car accident. If you do not have legal representation, you can end up at fault, even if you believe that someone else was to blame.
To be in a position to receive financial compensation, you need to show that someone else was negligent. In a car accident case, negligence means that the driver acted unreasonably. They did something that an ordinary driver might not have done. For example, the insurance company assumes the rear-car driver is negligent in a rear-end crash because a reasonable driver should have stopped and not hit the car in front of them.
Car Accident Attorneys Can Help Prove Your Case
An experienced car accident attorney will work to gather evidence that will back up your side of the story.
To help prove your car accident claim, your lawyer may:
- Determine whether there were any witnesses to the crash and speak with them to gather their recollection
- Review the police report and follow up on any potential leads in the report about the officer’s observations and the conditions at the time of the accident
- Review pictures or videos of the scene of the accident (your lawyer may visit the scene to see what else they can learn)
- Speak with an accident reconstruction expert in case there is no other evidence that can help prove your claim
You should not be in a position where you are at the insurance company’s mercy. Your car accident lawyer will present your point of view and advocate for your interests. The facts and the law will ultimately control your right to financial compensation. What matters is how they get presented, and a lawyer knows how to gather the evidence and argue your facts.
You will pay nothing to speak with an attorney. You should schedule a free consultation today to learn more about your legal options and whether you may be entitled to financial compensation. The insurance company may try to rush you into giving a statement because they want to blame you for the crash. Never speak to them, especially without seeking the advice of an experienced lawyer first. Insurance companies will try to lay every trap possible for you to save themselves money.
Auto Insurance FAQs
Q: What alternatives are there to finding lower rates after an accident if my insurance company wants to spike my rate too high?
A: Shop around for other car insurance companies. Many will offer a lower rate than your current one to attract new customers away from their competition.
Q: If I can’t prove I was not at fault, but a court can’t prove that I was at fault, will my rates still go up?
A: It all depends on the nature of the accident and the amount of the insurance claim, and whether or not the insurance determines you to be at 50 percent fault or not.
Q: What about companies with accident forgiveness?
A: These companies obviously should not raise your rates if they say so in their advertisements and solicitations for your business or in their contract for your insurance policy.
Q: What if the accident was my fault, but it did no damage to anybody else?
A: Your insurance will likely still increase if you filed a claim for your vehicle.
Q: What car insurance company is most lenient on rate hikes?
A: That all depends on the person seeking the insurance coverage, what rates are available, policies on accidents applying to your age group of driving, your past driving history, and other factors affecting the policies available to you.
Always Seek Help from a Car Accident Lawyer
You might not think your accident was serious enough to warrant a personal injury lawyer, and you might consider dealing with insurance companies alone. However, you might not realize this can lead to the denial of compensation for your losses – or even your own insurance rates going up.
Instead of risking an unfavorable result, seek help from a car accident attorney near you. The right lawyer can assist with every aspect of the process, including communicating with your insurance company to demonstrate you were not at fault.
Recovery is personal.
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