An accident happens in the blink of an eye but has long-term effects in many ways. You have to recover from the injuries. You have to get the car repaired. Take care of the bills and mountain of payments and what not! However, there is another aspect to consider- the premium amount or insurance rate.
Statistics show that the insurance rate can double after you’ve been in an accident. While it may not be immediately evident, you will notice the increase when renewing the policy for the next year. Finding another insurance company may not always be the right answer. The insurer will still go through your driving records and notice the accident.
So how can you deal with it? Is there a way to minimize the adverse impact of an accident on the insurance rate? How can you find low-cost auto insurance after an accident? Let’s find out.
How Does an Accident Affect the Care Insurance Rate?
According to Forbes Advisor, an accident will directly impact the premium amount. Insurers have increased the rate from 21% to 73%, depending on the state and the policyholder. For example, California has the highest increase for accidents/ collisons with injuries while Wyoming has the lowest (but the spike cannot be avoided).
The average hike in insurance rate is around 50% in the US. That’s a lot of money to spend on vehicle insurance! Another observation is that the insurance rates are higher for at-fault accidents with bodily injuries than those with property damages. Other factors that determine the increase in insurance rate are the driver’s age, past driving record, and the reason for the accident.
Cause/ Reason for the Accident
The insurance rates will surely increase if you are at fault. However, the actual percentage will depend on issues like if anyone was injured in the accident, the property damage caused by the accident, and the cost of medical bills.
But what if the accident is not your fault? What if it is because of an uninsured motorist? The surcharge may or may not increase. This depends on how much the insurer pays for your bills and the state you reside in. When you file insurance claims even when you aren’t at fault (personal injury protection), the insurance rate is most likely to rise.
Furthermore, insurers don’t always rely on the black-and-white picture. Sometimes, an accident is caused by both parties. Insurance companies will analyze the accident details to see how much of it is your fault (10%, 30%, 60%, 90%, etc.) and increase the surcharge accordingly. You may also have to submit proof to the insurer that the accident is not your fault.
Your Previous Driving Record
If there are no previous records of traffic accidents, collisions, speeding tickets, etc., on your name, the insurer may not increase the insurance rate or up it only marginally. However, if you have been in accidents before and have claimed for those, the insurance rate will definitely be high as the insurer considers you to be a high-risk client.
Also, remember that an accident will reflect in your record for three to five years. Your premium is likely to be more during this period. It will decrease over time if you don’t get into another accident.
Property Damage due to Accidents
The increase in insurance rate for property damage (but with no bodily injuries) depends on the extent of the damage. For example, if the cost of property damage/ repair is less than $700, there may not be an increase in the surcharge (or the rise could be less). However, if the damage crosses $2000, there will be a definite increase in the insurance rate. The percentage is usually determined based on how much damage the accident has caused to the property.
What is Accident Forgiveness?
Accident forgiveness is coverage that prevents the policy premium from increasing even if you’ve been in an accident. There is no blanket or common formula for this. Accident forgiveness is calculated differently for each client. The insurer has the right to use this based on their discretion. Accident forgiveness can either waive off the increase or provide a one-time discount if you have a good driving record.
Ways to Reduce Insurance Rate After an Accident
Here’s how you can reduce the insurance rate and premium:
- Find the best cheap auto insurance in Nevada by contacting a reputed insurance agent.
- Join the defensive driving program and clear the test.
- Ask for other discounts to offset the increase.
- Try insurance telematics model
- Improve your credit score
- Talk to more than one insurer before deciding.
- Understand that you may still have to pay a little extra amount than before.
Conclusion
We cannot avoid accidents no matter how much we try. The wisest thing to do is to alert and minimize damage in all possible ways. Talk to an experienced insurance agent soon after the accident and have a backup plan ready. You can get affordable auto insurance after an accident if you search for it.
Based in New York, Stephen Freeman is a Senior Editor at Trending Insurance News. Previously he has worked for Forbes and The Huffington Post. Steven is a graduate of Risk Management at the University of New York.