How Much Does Car Insurance Go Up After An Accident?
Do you intend to file a claim with your auto insurance company? Filing a claim for a totaled car or an accident can result in a significant increase in premium rates. Here are a few things to keep in mind when filing a claim.
According to InsuranceQuotes, the average increase in the United States for someone with full coverage that includes collision and state-mandated liability costs is between 34% and 41%. For example, if you have a clean driving record and your annual premium is $1,555, filing an at-fault accident claim could raise your premium to $2,090 or higher depending on where you live.
Furthermore, according to a joint study conducted by InsuranceQuotes and Quadrant Information Services, a single auto claim can result in significant premium increases. Furthermore, premium increases have crept up gradually over the last few years.
Insurance rate effects after an accident
The increase in your insurance premiums after an at-fault accident varies depending on your location, driving record, vehicle, and insurance company. After reviewing the data below, we discovered that drivers should expect a 23 percent to 73 percent increase in premiums in the first year following an at-fault accident.
Here are some examples of typical post-accident insurance rates with popular U.S. car insurance companies in the first year following an at-fault accident:
Company | Average Premium After At-Fault Accident | % Change in Average Premium After At-Fault Accident |
Nationwide | $2,174 per year / $181 per month | 61% |
Farmers | $2,226 per year / $185 per month | 6% |
Progressive | $2,772 per year / $231 per month | 73% |
Liberty Mutual | $2,358 per year / $196 per month | 43% |
State Farm | $1,617 per year / $134 per month | 23% |
Geico | $1,997 per year / $166 per month | 57% |
Allstate | 3,017 per year / $251 per month | 60% |
Progressive is the insurer whose rates are most affected by an at-fault accident within the first year after the accident, with a whopping 73 percent premium increase. State Farm, with a 23 percent increase in premiums, is the insurance company whose rates are least affected by an at-fault accident.
Effects of insurance rates by state
While statistics show that your insurance rates may rise regardless of where you live, some states report higher increases than others. According to the InsuranceQuotes study, the following five states had the highest premium increases after a single $2,000 or more auto claim:
- California: 63.1% increase
- New Hampshire: 60.3% increase
- Texas: 59.9% increase
- Massachusetts: 57.3% increase
- North Carolina: 57.3% increase
The states with the lowest premium increases following a similar claim were:
- Maryland: 21.5% increase
- Michigan: 26.1% increase
- Oklahoma: 27.9% increase
- Montana: 30.2% increase
- Kentucky: 30.6% increase
The wide swings in premium increases, according to experts who commented on the study, are due to the fact that insurance regulations vary greatly by state. In California, for example, voters approved a proposition in 1988 that restricted the factors that insurance companies could use to determine auto rates. Because California insurance premiums could only be based on driving record, average miles driven, and years of experience from that point forward, it was only natural for at-fault claims to cause premiums to burst.
Insurance companies in Maryland can base premiums on factors such as gender, age, occupation, credit score, and marital status. The state's broader set of rules for insurance companies may punish unmarried young men with bad credit regardless of whether they're good drivers or not, but it's likely the reason Maryland had the lowest after-accident premium increases of any state.
Car insurance rates after an accident, explained
How long will my rate be higher?
Increases in your insurance premiums can last for three to five years following an at-fault accident if the damage to your vehicle exceeds $2,000. Rates differ, with some insurers charging significantly more than others.
How to lower your rates
While you can't change what happened after the fact, there are a few steps you can take to try to lower your premium:
- Inquire about accident forgiveness: This is a proactive tip rather than a reactive one, but when shopping for car insurance, inquire about insurance providers' accident forgiveness policies. Not all companies provide this, but those that do will provide you with one at-fault accident with no premium increase if you meet certain criteria.
- Think about your deductible: Insurance premiums and deductibles are inversely proportional. When you choose a lower deductible, your premium will be higher. When you choose a higher deductible, your premium will be lower. If your premiums rise as a result of an at-fault accident, consider raising your deductible (if possible) to reduce your annual premium.
- Avoid making minor claims: Insurance companies base your premiums on the financial risk you pose to the company. More claims can result in higher payouts for the insurance company. If you've recently filed a claim for an at-fault accident, don't file any more claims for minor issues for a while.
- Look around. As you can see from the data we gathered above, the percentages of premium increases following an at-fault accident vary greatly by company. It never hurts to get some quotes from different service providers.
- Boost your credit score. This will not be an immediate benefit because improving one's credit score takes time. Insurance companies, on the other hand, appear to offer lower premiums to those with credit scores above 600.
Which claims have the greatest impact on your rates?
Not surprisingly, the InsuranceQuotes study concludes that bodily injury claims can cause the greatest increase in premiums.
According to the press release, “bodily injury claims are filed whenever a driver causes injuries to individuals as a result of an accident.” “And, because they are frequently so expensive, all states, with the exception of New Hampshire, require drivers to obtain a minimum amount of coverage for these circumstances.”
According to the statistics, a single bodily injury claim will result in a 48.6 percent increase in premiums. However, some states experienced higher premium increases as a result of bodily injury claims, including California (73.2%), New Hampshire (65.9%), North Carolina (65.9%), Texas (64.8%), and Massachusetts (62.3 percent ).
Comprehensive auto claims resulted in the smallest overall premium increase. In contrast to bodily injury claims, which can result in significant medical bills, comprehensive claims include events such as running out of gas, hitting a deer, or having a tree fall on your car.
The costs in each of these cases are typically insignificant. Nonetheless, the average premium increase following a comprehensive claim was 2% across the board. Only Nebraska (10.6 percent), Louisiana (9.7 percent), Minnesota (7.1 percent), Wisconsin (6.9 percent), and Iowa (6.8 percent) reported increases that were significantly higher than the national average.
What if I wasn't at fault for the accident?
If your insurance company does not provide accident forgiveness, whether or not your rates will rise after an accident in which you were not at fault is determined by the insurance company. Some providers will not raise your premium if this is your first accident, but if you have multiple accidents, even if you are not at fault, your premium may be raised.
Your insurer considers how risky you are to insure. You are at a higher risk if you are at fault in an accident. You may not be perceived as a higher risk if you have one not-at-fault accident. However, if you have several not-at-fault accidents, your perceived risk level with the insurance provider will rise because you are driving in high-risk accident situations, whether you are at fault or not.
The bottom line is that, while it is preferable to have a not-at-fault accident, any accident may raise your car insurance rates.