How Do Car Accidents Impact Insurance Rates?

How Do Car Accidents Impact Insurance Rates?

Feeling hesitant about contacting your insurance company after an accident is understandable. Most drivers make the assumption that filing any kind of claim with their insurer will automatically result in higher premiums. While this is true in some cases, how car accidents impact insurance rates really depend on specific state and provider rules.

A 2015 study by insuranceQuotes.com found that drivers who make just one claim could end up paying an average of 41 percent more for their car insurance – this is usually the case for single claims of $2,000 or higher. The average U.S. auto insurance premium is $815 and this would equate to an increase of $335 per year. Drivers who make two claims in one year can expect an increase of more than 90 percent.

Fortunately, if the accident was not your fault then your payments should not be affected to such an extreme extent. Minor accidents and fender benders may not automatically cause an increase, especially if you have a long history of safe driving. This may also be the case when it comes to fault. If you were not at fault in the accident, there is the possibility that your rate could remain the same.

Some insurance policies include accident forgiveness for your first violation or claim. If you’ve just had your first accident and your insurer provides accident forgiveness, you do not have to worry about a rate hike. Review the details of your policy or call your provider to find out if you are protected by this clause.

In general, states with stricter insurance regulations seem to have larger rate spikes after an accident. This is because laws mandate that insurance premiums be based solely on a handful of factors. In California, for example, a driver’s premiums are based on driving safety record, miles driven per year, and years of driving experience. If you get into an accident, your driving record does not help you, leaving insurers only two factors for determining your rates. However, states like Maryland allow insurers to include many factors in deciding rates such as gender, age, occupation, credit score, etc.

When it comes to how long drivers will have to pay increased premiums, there is no exact answer. These payments also vary by insurers and state, but here are some general guidelines:

  • Minor tickets – Moving and non-moving violations aren’t likely to impact your premiums too much. However, if you receive a second ticket, you could see a 3 to 10 percent increase to your premium. A third ticket could result in an additional 10 to 15 percent increase. Repeat offenders with a history of bad driving can expect to see the worst penalties. Traffic violation tickets will usually stay on your record for three years from the date that you are convicted.
  • Major tickets – One major ticket can cause a big increase to your monthly payment, possibly for the next two to five years. It is not uncommon for one major ticket to result in a 10 to 50 percent increase, while subsequent tickets will result in even higher percentages.
  • Car accidents – If you have an at-fault accident within a six-year period, your rates are unlikely to be affected, but you should consult with your insurer to confirm. If you get into a second accident, you could experience increased rates lasting between three to six years.