I’ve had an accident: How much will my car insurance rates increase?
If you’ve had an accident, chances are you’ll be paying more for car insurance when your policy comes up for renewal. Though it’s almost inevitable that you will see that increase, the amount of the increase can vary significantly depending on the state in which you live and who is currently carrying your insurance.
Insurance experts will tell you that the amount of increase after an accident is dependent on many factors, but much of it depends on the nature and severity of your car accident and whether or not you were at fault. If you were driving while intoxicated, for example, you are going to be in deep trouble with both your insurance company and the law. You may not even have a chance to see your rates increase, as your policy will most likely not be renewed. You will probably still be able to get insurance but it will cost you a lot more money.
Many insurance companies will automatically up your premium if you were found to be “at-fault” for a car accident. On the other hand, if you have a good record and have been with a particular company for a few years, and then were in an accident that was not severe – even if you were at fault – you may see only a modest increase. In some cases, though these are more rare instances, you may see no increase at all.
So, how much could your rates increase in the event you have an accident?
The Insurance Services Office (ISO) puts forth a standard for a policyholder’s first at-fault accident. That standard is 20% to 40% of the insurer’s base rate (20% for a multi-car policy and 40% for a single-car policy). Note that a base rate is not the policyholder’s current rate instead it is the average amount of claims paid plus the insurance company’s claims-processing fee. If you have a good driving record prior to this accident, chances are good that the base rate will be higher than your pre-accident premium rate. Which means your cost of insurance will be going up.
ISO standards hold that for property-damage-only accidents where the damage is less than $1,000, there should be no increase. It also holds that there should be no increase if the accident is caused by someone who has been driving for less than two years. This is because that new driver is already being penalized with higher premiums based on their inexperience. Note also that individual states have their own surcharge exemptions and limitations in place that may affect increases in rates due to having an accident.
How the increase will apply to you often depends on your carrier. Some insurance companies will base the increase on your pre-accident premium rate rather than the base rate. Others will look at the claims statistics of drivers who are similar to you in terms of age, where you live, and your driving record before determining what your increase will be.
There are other factors that come into the equation as well. If, for example, you made the claim and then bought a more expensive vehicle before renewal time, you might see your premium increase as much as 100%. Or perhaps your birthday falls before the renewal period and that birthday puts you into a lower risk category. That situation could have the effect of lowering the amount of the increase because you are now in a lower risk group. Or let’s say you sold your expensive “pimped out” SUV and bought a standard, used minivan between the accident claim and the next renewal period. In that case, your savings on the vehicle switch could very well help offset the increase in rates called for because of the accident.
In addition, some insurance companies “forgive” customers with good driving records the first time they cause an accident. Accident forgiveness is not universally practiced in the industry, and car insurance companies that do forgive good drivers often require those drivers to meet specific criteria before they qualify. As you’re shopping for car insurance, you might want to find which car insurance companies offer first-time accident forgiveness. Simply asking about whether or not a company offers it could save you a lot of money on car insurance over time.
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