If you get in an auto accident, your auto insurance premiums will likely increase even if the accident was not your fault. When does car insurance go down after an accident? Review this guide to find out when you can expect relief.
Average Insurance Increase After an Accident
Insurance customers who file an accident claim see an average annual premium increase of $767, nearly 50 percent higher than the average rate of $1548 for drivers who have clean records. Usually, the increase remains for at least three and up to five years, which results in a total increase of $2300 according to calculations by Policy Genius.
Some companies do not raise customer rates for accidents they did not cause. For example, Quote Wizard reports that USAA, an insurer for military members and their families, promises to keep premium costs the same for policyholders who file claims but did not have responsibility for the collision.
Some states have specific laws about raising customer insurance premiums. For example, in New York, insurers can only increase policy rates after at-fault accidents that involve more than $2000 in property damage or any bodily injury.
Average Insurance Increase by Company
The Zebra reports that State Farm, GEICO, and USAA offer the smallest price increases after an auto accident. In fact, USAA and GEICO have accident forgiveness programs that allow you to keep your rates the same even if you file a claim. However, you cannot access this type of coverage in every state. In addition, you usually have to have at least three years without a claim before qualifying for accident forgiveness.
The website ranks the average annual increase by company after an auto accident as follows:
- State Farm – $304
- USAA – $340
- Farmers Insurance – $701
- Liberty Mutual – $710
- GEICO – $721
- Nationwide – $826
- Allstate – $1129
- Progressive – $1168
Timing of Insurance Increase
As mentioned above, most insurance companies will remove the accident surcharge within five years of the collision if you have no further accidents during that time. The Zebra notes that the farther the incident occurs to your policy renewal date, the longer you can expect to pay more money for auto coverage.
While three years is the average duration of an auto insurance increase after an accident, you may have to pay a higher premium for more than 36 months after a bodily injury claim, accident involving driving under the influence, reckless driving ticket or accident, accident causing serious bodily injury or death to another person, or several violations within a short time period.
In any of these cases, the state may require you to get high-risk, or SR-22, insurance. You might be unable to get coverage from a traditional auto insurer at an affordable rate. You might also have to serve a license suspension before you can qualify to get car insurance again. You have to prove that you have liability insurance to obtain driving privileges with an SR-22.
Reasons for Insurance Increase
Insurance companies raise rates after accident claims for a few reasons, including the increased risk associated with insuring customers who have already had one accident. Statistically, these individuals have a higher likelihood of another accident, which makes them more costly for insurers. Insurance firms also want compensation for the cost of the time, parts, and labor associated with your claim. These surcharges typically do not fall under your standard premium costs.
Premiums don’t always go up after an auto accident. For example, rates may not increase after a collision another driver caused, after a small fender bender, if you have not had an accident in at least six years, or if you have accident forgiveness on your policy. However, even in these instances, you might lose a good driver discount.
Driving Record Considerations
Nerd Wallet reports that you can expect an accident to stay on your driving record for several years. The exact amount of time varies by state, so check with your local Department of Motor Vehicles to learn more. For example, California retains information about violations and accidents for about three years, but details about more serious convictions such as driving under the influence for about 10 years. Accidents appear on your record even if you were not at fault if the incident resulted in injury, fatality, or more than $1000 in property damage.
In Florida, a motor vehicle collision appears on your driving record only if you get a ticket after the accident. In this case, it will remain on your DMV report for up to five years, or longer for more serious offenses. In fact, a DUI stays on your record for 75 years in Florida.
Saving Money on Insurance After an Auto Accident
You can often save money on your auto insurance premiums after an accident by looking for a better rate with a different insurance company. Since every insurer has its own algorithm to calculate quotes, be sure to fully research available policies.
When you shop around for quotes, ask each company about available discounts, including those they may not readily advertise. Common discounts include price breaks for safety or anti-theft features in your vehicle, reducing your average mileage, or earning at least a B average if you’re a high school or college student.
Sharing a policy with a driver who has a clean record and several years of experience can often lower your rates. You can also bundle your homeowner’s or renter’s policy with your auto insurance policy to save.
Avoid filing a claim if at all possible, especially soon after another accident claim. You’ll likely see an even bigger rate increase in this case, even for a minor collision. Paying out-of-pocket can potentially save you a lot of money on insurance premiums in the long run.
If you have an older car, you can usually drop comprehensive and collision coverage to save money after an accident. Other unnecessary add-ons include rental car reimbursement and roadside assistance policies.
Check this out if you need additional information, resources, or guidance on car insurance.
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