Car insurance is one of the biggest businesses in America. The car insurance industry is massive and deals with excessive amounts of money coming in and going out constantly. Given the protection offered, these rates are often higher than people would like to pay, but the insurance industry dictates the cost, and insurance is necessary for most people. One of the methods insurance companies use to protect themselves against costlier drivers is raising rates based on poor driving and an exhibited higher likelihood of being in accidents.
Thus, when you have a driving infraction or accident, insurance companies raise your rates to cover the additional expenses incurred by them in covering you financially for the damage and costs associated with the accident. Insurance companies have a pretty standard set formula on how they raise rates after a car accident, although each company has a different rate, so it is hard to come up with a uniform answer on how much one’s insurance will go up after an accident.
Fault Matters
An accident affects your car insurance rates for three to five years on average, although this varies by state and company. Even if it was a minor crash, insurers perceive you as a greater risk and will almost always increase your rates if you were to blame.
A study by NerdWallet compared average car insurance rates nationwide for 40-year-old drivers with a recent at-fault crash and those with no recent accidents. Keeping all other factors the same, they saw some interesting results. They used full coverage insurance policies for a 2018 Toyota Camry and a hypothetical accident resulting in $10,000 worth of property damage and no injuries.
The analysis found that:
- Nationwide, a driver with an at-fault accident pays $846 more a year on average than a driver with no traffic violations.
- In 45 states and Washington, D.C., average annual rates were more than $500 higher for drivers who caused a recent accident than for those who had not.
- In 19 states, average rates increased at least 50 percent after an at-fault accident.
- In Texas, Louisiana, and California, average rates increased by more than $1,300 per year after an at-fault accident.
These raises in rates for one’s car insurance are staggering. Even if you have a pristine driving record and cause an accident, here’s some bad news: the national average rate increase is 41 percent for drivers with a clean record who cause an accident. If an adjuster finds you to be at fault for a car accident, you’re most likely going to see an increase in your car insurance rates at renewal time.
This is because an at-fault accident is considered a “chargeable” accident, which generally means you were more than 50 percent at fault and the accident caused:
- Damage to someone else’s property, such as another car or a fence
- Bodily injury or death to someone else
The car liability insurance portion of your policy covers property damage or injury to someone else. When someone files a claim against your liability insurance, this could result in a surcharge, which is the actual rate increase after a chargeable car accident. So, this acts as a hidden rate increase as essentially being a penalty payment for having a claim filed against your liability insurance. The overall severity of the car accident and the resulting cost of an insurance claim can impact your rates.
For example, a minor fender bender typically won’t have the same impact on your insurance rates as a major accident. In certain states, your insurer won’t raise your rates if the claim is under a certain dollar amount. For example, if you cause a car accident in Massachusetts, you won’t get a surcharge for claims under $1,000.
No Increase if You Were Not to Blame
Car insurance rates generally go up only when you cause a car accident that results in damage or injuries to others. If you can show that someone else was to blame, your insurance company should not increase your premiums.
Here are some examples of non-chargeable car accidents:
- Someone struck your car in a hit-and-run accident.
- Your car was legally parked when it sustained damage.
- Your car was struck in the rear by another vehicle, and you were not guilty of a moving traffic violation in the accident.
However, insurance companies will often require proof that you were indeed not at fault.
If you’re in an accident, your car insurance company might require proof that you weren’t to blame, and here are some examples of evidence you can procure and offer to satisfy this proof:
- A police report about the accident
- A statement from the other driver’s insurance company accepting fault
- Another driver’s written statement, under penalty of perjury, attesting to fault
- A legal document showing that another party reimbursed you for accident damage
Often, the best way to prove someone else was to blame is by seeking help from an experienced car accident attorney.
If your rates do go up, expect them to stay that way for three to five years after the accident. Surcharges in some states will go down for each year without another incident, but generally, it takes three to five years of safe driving for your rates to lower again.
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.
