UPDATED: Mar 13, 2020
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How does an accident affect the rates you pay for car insurance? Is your auto insurance guaranteed to increase after an accident? How much of an increase can you expect? Today, we’re answering all of your questions about car insurance after an accident.
First, let’s start with some good news. Several major car insurance companies have something called “accident forgiveness.” Accident forgiveness could mean that your rates stay mostly the same after a collision – even if you’re at fault. However, accident forgiveness isn’t available at all companies. And, the companies that do offer accident forgiveness are often forced to charge higher rates. It’s also important to note that even with accident forgiveness, the insurance company could still increase your rate after an accident because you’ll lose your good driver bonus.
Once you’ve had two accidents, all bets are off. No insurance company offers accident forgiveness for two at-fault accidents.
The amount of money by which your premium will increase varies from case to case based on several different factors. Generally speaking, your insurance company will charge you more for insurance if you cost the company more money. If you’re the type of driver who frequently makes costly insurance claims, then you’re going to pay significantly more for car insurance than someone who has never made a claim. If you continue to make claims, then your car insurance company will view you as a risky driver, and your costs may increase.
By How Much Can I Expect Rates to Increase?
So you’ve been involved in an accident. You’re worried about how much more you can expect to pay for car insurance.
If your insurance company offers accident forgiveness, then your rates might not change at all. However, in most cases, even with companies that offer accident forgiveness, your rates will still increase because you’ll lose your good driving bonus. An insurance company might provide you with a 5% discount for every year of clean driving, for example, up to a maximum five year period. That means your rates could increase up to 25% after an accident – even if your insurance company offers accident forgiveness!
Generally speaking, you can expect auto insurance prices to rise by 25% to 50% after a single at-fault collision.
These rates will remain high for a significant length of time. However, the specific length varies between insurance companies. Some insurance companies will ask if you’ve had an at-fault collision in the last seven years, for example, although most only ask if you’ve had one within the previous five years. That means your at-fault accident will lead to higher insurance premiums for at least 3 to 5 years.
After a Second Accident, Your Insurance Rates Will Continue to Rise
Your first accident will always cause your insurance rates to rise. However, the impact is relatively small – particularly with insurance companies that offer accident forgiveness.
The same cannot be said for your second accident. After a second at-fault accident, you can expect insurance prices to rise significantly. In some cases – like after two serious at-fault accidents that caused significant injuries and damages – an insurance company might even refuse to insure you. As the risk involved in insuring you has increased, you might be pushed into the “high-risk driver” category from your insurance company. Or, you might be forced to work with an insurance company specializing in insuring high-risk drivers.
Ultimately, after a second accident, you can expect insurance rates to continue rising. You’ll typically pay at least double the cost of your initial premium.
Insurance Increases Vary Between States
Studies have shown that drivers in different states pay significantly different rates for car insurance. Similar studies show that drivers in certain states pay substantially more after a car accident, while drivers in other states pay a relatively small increase.
You don’t want to get into an accident in California, for example, where your premium will jump 86% after a single claim. Drivers in Maryland, however, will pay just 22% higher rates for insurance after a single claim.
According to a report by CBS News, here are the five states with the largest and smallest premium increases after a bodily injury claim of $2,000 or more:
- California: 86% higher premiums after a single bodily injury claim of $2,000 or more
- Massachusetts: 83%
- New Jersey: 69%
- North Carolina: 58%
- Minnesota: 52%
- Maryland: 22% higher premiums after a single bodily injury claim of $2,000 or more
- Michigan: 25%
- Montana: 27%
- Oklahoma: 27%
- Mississippi: 28%
Why do drivers in some states pay more after an accident? States with stricter insurance regulations tend to have more significant rate spikes after an accident, according to the study. In California, for example, insurance premiums can only be based on three things: driving record, annual mileage, and years of driving experience. When you get into a single-car accident, you blow one factor – your driving record – out of the water. Insurers aren’t able to base your insurance price on many other factors – even if you’re an otherwise perfect driver.
The same study found that insurance increases aren’t permanent: drivers can expect to pay higher insurance for a 3 to 5 year period, after which your premiums will start dropping back to pre-claim levels.
Conclusion: Reduce Prices by Comparing Auto Insurance Quotes Today
The good news about auto insurance is that you have plenty of different options. There are hundreds of small and large auto insurance companies across the United States. These car insurance companies all work in different ways. Some car insurance companies will reward good drivers and punish bad drivers. Other companies will make good drivers pay a little more while allowing bad drivers to pay a little less.
If you’ve been involved in one or more accidents and are frustrated with high insurance prices, then now is a good time to move to a different auto insurance company. Start comparing quotes today. The more quotes you compare, the better deal you can get.
It takes just a few minutes to compare auto insurance quotes online – but you can save hundreds on your car insurance after an accident.