What is an accident’s effect on car insurance? Do insurance rates always go up if you have an accident? Continue reading to find out how a car accident affects insurance…
Its a popular trend these days for auto insurance companies to offer “accident forgiveness,” essentially relieving you of a rate hike if you happen to get into an auto accident within their set time frame. This is great, but still a majority of auto insurance companies have not yet jumped on board with this concept. And many of those that have will charge a higher premium for this service, or will really increase your rate on the second accident.
The amount of money at which your premium will increase varies from case to case based on a number of factors. The cost to the insurance company is a major contributing factor to this figure. The frequency of accidents and claims play an even bigger role in a car insurance increase. As you’re required to make claims, the auto insurance company will begin to see you and your car as risky and costly to the company, in turn shooting your rates through the roof.
If you’ve recently been involved in an expensive accident, your auto insurance is likely going to retry to recoup their costs. Both property and bodily damage are taken into account. In these scenarios, expect to see a 25-45% increase in your rate when its time to pay your premium again. Again, more expensive policies, may reduce the effects of a bad accident on your premium.
These rate increases can remain with you for quite some time of you do nothing about it. A simple way to get these reduced is to threaten to move to a different auto insurance company, but if you are considered a great risk to the company, they may let you go as a customer. Another alternative is to prove you plan on improving your driving and safety.
Driver improvement classes are a great way to get the increases reversed. However, if its not your driving that’s the problem, rather theft, vandalism, and safety that are requiring claims to be filed; you may consider installing an alarm system, parking in a private garage, or install modern safety devices within the vehicle.
If you haven’t quite caught on to the trend here, the concept is that with each accident and claim you are costing them money and proving yourself to be accident prone. As the risk involved with insuring you and your car increases, so do the premiums you have to pay.
The bottom line is this: you will have to pay more if you are in an accident. On the other hand, there are many steps you can take to once again reduce your premium and reduce financial risk to the insurance company that holds your policy.