Updated February 20, 2020

Car Insurance After Accident: What You Need to Know

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An at-fault car accident might not increase your insurance as much as you think. And you may be able to avoid any increase at all. Find out how in our guide.

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If you cause a serious accident or are involved in a major collision, your car insurance rates will probably rise. But every accident doesn't necessarily mean skyrocketing premiums.

Car insurance prices are based on a number of factors. Your driving record is one of the most important.

If you have a history of safe driving and have not filed any other claims, minor car accidents or fender benders may not negatively affect your rates. This is particularly true if your car insurance provider offers accident forgiveness.

On the other hand, a poor driving history, including multiple claims or incidents, make you a higher risk for insurance companies. That means your rates will likely jump. But even in that situation, you may have options.

Read on to learn:

How Much Will insurance Go Up After an Accident?

Since companies and situations differ significantly, it's difficult to say exactly how much your rate will go up after an accident.

If a car accident was your fault, someone was injured, or it was a major collision that caused major damage, you could see an insurance increase of 20%-25% or more. In 2017, an at-fault accident increased car insurance premiums by an average of 48% in the U.S.

That means your annual premium could increase a few hundred to several thousand dollars, depending on your coverage and rates prior to the accident (as well as the severity of the claim).

States with the highest rate increases after an accident:

  1. California
  2. Delaware, and
  3. Massachusetts

States with the lowest rate increases after an accident:

  1. Maryland
  2. Mississippi
  3. North Dakota
  4. West Virginia

Keep in mind, rates can vary by ZIP code.

Your specific circumstances can also affect the increase. At renewal time, the insurance provider will review your payment, claim, driving record history, and policy change history to help determine how much to raise your rates.

How long does a car accident affect your insurance?
Most companies will raise your rates for three to five years after your accident, particularly if you were at fault, it was a serious collision, or if someone was injured. In many cases, your rates gradually decrease each year as long as you don't have another incident. In some states, you'll see the increase go down over three years.

However, you may be penalized longer for a violation such as:

  • Reckless driving
  • Bodily injury claim
  • Multiple violations within a certain period of time
  • An accident resulting in serious injury or death of another person

How long does it take for my insurance rates to be affected?

Even if you don't file a claim, your insurance company can raise your rates for up to five years after an accident. Once you file a claim, your rates will likely increase the next time your insurance policy comes up for renewal, which can happen every 6-12 months.

Depending on the severity of the incident or violation, they can raise your premiums mid-year and you will see the increase on your next statement or bill.

Can I get car insurance after an accident?
There's nothing preventing you from purchasing auto insurance after an accident—though the cost of coverage may be higher. However, your new policy won't help with an accident that already happened.

If you didn't have coverage at the time of the accident, then you aren't covered. Any claim for an accident that happened previously will be denied and you could even face criminal penalties for insurance fraud.

How can I lower my auto insurance after an accident?

Your car insurance rates may rise after an accident. But there are some ways to try and prevent a significant premium increase. The most important thing to do is avoid further incidents.

Following an increase, most insurers will lower your rates each year as long as you have a clean driving record. Here are a few more things you can do:

Tell your insurance company
Report the accident to your insurance company, even if it's minor. If the other driver sues you for injuries or damages at a later date, you could get in trouble for failing to report it. This could lead to you paying legal fees and damages out of pocket, on top of a significant rate increase.

See if your policy includes accident forgiveness
Auto accidents are a part of life. Some insurance companies are willing to ignore your first one and not raise your rates. Exact details, such as how many years you must be a policyholder before the forgiveness kicks in, vary by company. Make sure to talk to your insurer or agent to see if they offer this feature.

Shop for a new policy
If your rates do increase, you can always shop for a new policy. Another company may offer more discounts or be more forgiving of your claims history (more on this below).

Raise your deductible
Increasing the amount you'll pay before coverage kicks in can save you 15%-25% or more. For example, you could raise your deductible from $500 to $1,000.

Keep in mind that your deductible is how much you'll pay out of pocket BEFORE your coverage begins. If you raise your deductible, you should be sure you can afford the amount you raise it to in case you are in another accident.

Ask about discounts
Insurance companies offer a variety of discounts to their drivers, and you may qualify for more than you currently have. See if your insurer offers:

  • Bundling
  • Early renewal
  • Multi-vehicle
  • Loyalty
  • Equipment-related discounts (new car, anti-lock brakes, anti-theft, etc.)
  • Having emergency roadside assistance
  • Going paperless

Take a defensive driving course
Driving courses aren't just for teenagers. Taking a course can lead to additional discounts, and your insurance company may take it as a sign you're trying to prevent another accident.

Switching Car Insurance After an Accident

While you can switch auto insurance after an accident, your rates may be higher than what you were paying before. They may even be higher perhaps than what you'd pay with your previous insurance company.

However, switching companies will typically have no impact on an open claim on your car accident. There is no penalty and your current insurer will still pay out the claim as it normally would even if you switch before the claim is fully resolved.

In order to switch car insurance companies, you simply have to quote and purchase a new policy from the new company.

Cheap Auto Insurance After an Accident

If you see a significant rate increase following an accident, you should get quotes from other companies either online or through an insurance agent. By comparing your options, you may find a company offering cheaper coverage.

Nationwide, Farmers and Progressive offer the least expensive premiums after an at-fault accident.

Accidents you don't cause may not raise your insurance rates at all. However, the more accidents you're involved in, the higher risk you are for the insurance company.

If you've filed multiple claims, you may still see an increase. The companies that keep rates relatively low after a no-fault accident are Geico, Nationwide, USAA, and State Farm. Allstate and Liberty Mutual are close as well.

How much does insurance go up after an accident for a teenager?

Teens are considered the highest-risk drivers for insurance companies. On average, your teen may pay $2,500 or more for their own insurance policy, compared to the average cost for adults of $1,500/year.

If a teen is on your policy, rather than one of their own, your rates could increase 50%-100% after an accident. Since your rates are likely already higher due to covering a teen driver, this can be a huge increase. It's recommended to work with your insurance company to learn how you can keep the increase as low as possible.

As with any driver, the increase will depend on the severity of an accident, driving and claims history, and injuries or damage caused. If the accident is alcohol- or drug-related, the penalty may be even higher

If your teen is considered too high-risk due to multiple violations, or if the accident results in significant vehicle or property damage, injury, or death, your insurance company may drop you or your teen. In this case, you'll have to work with an insurance agent to shop around for the best deal.

Teen drivers are 4-6 times more likely to be involved in a traffic accident than older drivers.

Bottom Line

A serious car accident will almost certainly raise your auto insurance rates. But a lesser one won't necessarily cause a massive increase since insurance providers base your premiums on a number of factors, including driving record, coverages, type of car, and even ZIP code.

If your insurance does rise after an accident, you still have options. Speak with your company or consider getting quotes from other providers to get the best possible price for your coverage needs.

Write to Caitlyn Callahan at feedback@creditdonkey.com. Follow us on Twitter and Facebook for our latest posts.

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