Do Car Insurance Premiums Increase After an Accident?

Right next to “What just happened???” one of the biggest questions people have after a car wreck is whether or not their insurance costs will increase after a car wreck. The answer here always depends on several factors.

One major factor determining whether or not your insurance premium will increase after an accident is what auto insurance company insures your vehicle. Many of the major auto insurance companies like Nationwide, GEICO and Progressive offer drivers a free pass when they have an accident through their Accident Forgiveness coverage options, which will keep insurance premiums at the same rate even when the accident is of the at-fault variety. Most of the time these coverage features are optional so it would be wise to know what your policy offers or what options are available before pulling the trigger on a policy. Also, while those features may be available at the point of sale they may have some conditions such as the policy holder shouldn’t have had any accidents in the last three to five years, for example. Additionally, auto insurance companies also have different levels of forgiveness. For example, Progressive offers coverage where there is no limit on small accidents as well as accident forgiveness on a large accident so it pays for consumers to research and see what is best for them. And Farmers forgives good drivers for one auto accident within three years.

Outside of Accident Forgiveness though, another factor determining whether an insurance premium rises after a wreck is how many insurance claims that policy holder has made previously. A high number of claims tell insurance companies that a driver is a high risk to insure because there is a good chance they will pay out some money on their behalf. Therefore insurance premiums are sure to rise for a driver that files a high number of insurance claims, in addition to how often insurance claims are filed, as well the cost and severity of those insurance claims.

Still one more factor is whose fault was the accident? If a driver was at fault and the damage is above the policy holder’s deductible then an increase is sure to follow in most cases. What size of an increase will depend on whether or not there were injuries, the dollar amount of damages and, of course, what company is insuring the policy holder. With some auto insurance companies, drivers may see an increase of 10% for the first wreck and that increase will follow them for roughly three years. Subsequent car will see increasingly higher increases. The amount an insurance premium increases depends on the insurance company but the standards for a rate hike established by the Insurance Services Offices is to increase rates from 20-40% in the event of a at-fault car wreck. In some states though fault is assigned a percentage and being at-fault even at a lower percentage than the other operator may cause a spike in car insurance premiums. Again it all depends on the driver’s insurance provider.

So while many factors come into play in deciding whether insurance rates will spike in the event of an accident it would behoove drivers to seek car insurance providers that offer the option of Accident Forgiveness like AARP, Farmers and Progressive which are conveniently located at AutoInsuranceMonitor.com which gives drivers a wealth of information regarding frequently asked insurance questions, consumer ratings and much more.