After a car accident, you will probably face huge expenses. If you carry only liability insurance, for example, you may need to pay the cost to repair your vehicle. Even if you carry comprehensive insurance, you may need to pay your deductible for repairs to your vehicle. You may have medical bills, items lost in the accident to replace, and lost time at work due to your injuries after the accident. Many people struggle to calculate one key expense after the accident: how much car insurance will increase after an accident.
By the Numbers: The Average
On average, drivers who report just one car accident can expect their rates to rise by 41 percent, according to news reports. If you assume the nationwide average of $1,502 per year in car insurance, that could mean a $615 or more increase following an accident. For individuals who report two accidents in a single calendar year, that jump could increase to 93 percent, meaning increased payments of nearly $1,400 during the year. Reporting even more accidents could increase insurance even more—or, in many cases, cause car insurance companies to drop the individual who has claimed those accidents entirely.
What Factors Increase Car Insurance Premiums?
While the average increase might sit at 41 percent, that does not necessarily mean that everyone will experience a 41 percent increase in insurance premiums after reporting and filing a claim based on a car accident. Many factors can increase how insurance companies handle their customers following an auto accident.
Your Driving History
To determine the increase you will face after an auto accident, insurance companies may start by looking at your driving history. If you have a relatively good driving history, with no previous accidents reported within the last few years and no tickets on your record, you may face a lower increase in your premiums than, for example, someone who has accumulated multiple speeding tickets over the past several years. You may also see a sharper increase in your premiums if you have a regular history of accidents, even accidents that did not occur within the past year.
Your Insurance Company
Some insurance companies advertise their accident forgiveness policies: according to their policies, if you suffer just one accident within a set period, often one to two years, they will not increase your insurance premiums. After all, those insurance companies state, accidents can happen to anyone, and you do not necessarily deserve punishment for a wreck that occurs because of factors beyond your control.
Many insurance companies also offer accident forgiveness below a certain threshold. For example, if you cause a relatively minor accident and claim less than $1,000 in damages, it might not increase your insurance premiums, even if your insurance company pays for damage to the other party’s vehicle.
Other insurance companies simply charge more for an accident than others. Adjusters often base the increase on standards they have little control over company-wide mandates that they must deal with following an accident. If your rates increase more than anticipated after an accident, especially if they go up more than the state average, you may want to shop around for a new insurance company.
The Extent of the Damages
Your insurance policy includes a maximum amount of coverage offered by the policy. How much coverage you must carry will depend on state laws. In Pennsylvania, you must carry a minimum of $5,000 of liability coverage for damages to the other party’s vehicle in an accident. For personal injuries, you must carry at least $15,000 per person and $30,000 per accident.
A single accident can become very expensive for your insurance company very quickly. A minor fender bender with only a mangled bumper may cost just $300 to $700—and that if the bumper requires replacement. If, on the other hand, you cause a serious accident that causes major injuries for the passengers in the other vehicle, you may face much more severe costs:
- The medical bills of the people injured in the accident. A broken bone that does not require surgical intervention alone can cost $2,500. More serious injuries, including traumatic brain injuries, spinal cord damage, or parties with multiple broken bones, can leave your insurance company paying out the maximum amounts of the policy.
- The maximum cost to replace or repair the vehicle. In many cases, in fact, especially if you hit a new car, the other driver may face more extensive costs than your insurance company will cover.
If you carry comprehensive coverage and your insurance company needs to replace or repair your vehicle, the insurance company’s costs may mount even further. The more your insurance company has to pay to take care of repairs and medical expenses after your accident, the more you may see your premiums increase as a result.
Even if your insurance company does not have to cover all of those costs—if, for example, the cost of repairs and medical bills exceeds the maximum offered by your policy—your insurance company may still consider the full extent of damage done to both the vehicle you hit and its occupants. If you cause a multi-vehicle collision, for example, you may see high increases in your premiums.
The Party Who Caused the Accident
Even if you didn’t cause an auto accident, your insurance company may still have costs. Pennsylvania residents, for example, must carry $15,000 of coverage for uninsured drivers, which can help you pay your costs if a driver without insurance causes an accident. You may also carry underinsured motorist insurance, which fills in the gap when the driver who hit your vehicle carries some insurance, but does not carry adequate insurance.
Imagine, for example, that you drive a 2012 Honda Odyssey. In the accident, the other driver totals your vehicle. Kelley Blue Book values a used 2012 Honda Odyssey at between $8,400 and $10,111. If the insurance company values your Odyssey at $9,000, but the driver who caused your accident carries only the minimum $5,000 of liability coverage, and you carry underinsured motorist coverage, your insurance company can help pay for the additional $4,000 you will need to replace your vehicle with a similar model.
Unfortunately, your insurance may show an increase when you rely on your underinsured motorist coverage to pick up the difference after an accident, even though you did not cause it. In some cases, you may decide that you do not want to use that underinsured motorist coverage. Always talk with your insurance adjuster before deciding to use your underinsured motorist coverage: discuss how it will impact your insurance premiums over time and whether you will ultimately bear responsibility for those costs.
In some states, insurance increases substantially more after an accident than in others. In Massachusetts, for example, rates increase by around 83 percent after a single accident. In Pennsylvania, you can expect your rates to increase by around 68 percent.
How Can You Decrease Your Auto Insurance After an Accident?
After an accident, you have enough expenses on your plate—and you certainly do not want to pay more for car insurance than you have to. Fortunately, you can use several important strategies to decrease what you have to pay in car insurance, even after an accident.
Talk to Your Adjuster
Often, your insurance company may offer decreased rates for a variety of factors. For teens, for example, staying on the honor roll can decrease their car insurance expenses by proving their responsibility. Students with a solid A average may have lower car insurance rates than those with A/B honor roll status, depending on your insurance company. Your insurance company may also offer lower insurance for:
- Individuals who take a specific test showing their knowledge of road safety. Some companies want teens, in particular, to take these assessments to prove that they absorbed specific information, thereby increasing the likelihood of safe driving behaviors and decreasing accident risk. If your teen has an accident, but has not yet taken that assessment, it can decrease auto insurance rates.
- Individuals who drive a less-expensive vehicle. If you carry comprehensive insurance on your vehicle, which you just totaled in an accident, dropping to a lower-priced vehicle can help decrease your auto insurance expenses as you recover financially after an accident. Before making a new vehicle purchase, see how your rates will change based on a less-expensive vehicle purchase.
- Individuals who install the insurance company’s app and engage in safe driving behavior. Many insurance companies have company-specific apps that evaluate the driver’s behaviors behind the wheel, including speeding, abrupt stops, and using their phones while driving. If you show evidence of safe driving behaviors over time, it can grant you a discount on your auto insurance policy.
- Lesser coverage. If your increased insurance premiums create financial hardship, you may choose to reduce your coverage to help lower your bills. Keep in mind, however, that this strategy will provide you with less coverage if you suffer damage in a future car accident. Keep in mind that removing many types of coverage, such as uninsured or underinsured motorist coverage, can decrease your immediate premiums, but may not provide the protection you need in the event of an accident.
Before you simply sign on the dotted line and accept increased insurance premiums, take the time to talk with your adjuster. While the adjuster may have no choice about an increase in your premium, often, he can offer advice about how to decrease your overall auto insurance expenses. In many cases, the system may adjust your premiums automatically after an accident report, so talking with an adjuster can help you argue your case.
Go Insurance Shopping
When your insurance premiums go up after an accident, you do not have to stick with your existing insurance company. Instead, consider shopping around to get more information about current rates offered by other companies. Make sure that you call in and get a quote for you, personally, rather than accepting a generic quote on the website. Those quotes might fail to consider a recent accident, which means they might not accurately reflect your rates when you go with a new insurance company.
Also, make sure you consider all the coverage that the policy offers: comprehensive insurance and collision insurance, for example, cost two different amounts and provide two different levels of coverage.
Take a Driving Course
When you cause an accident, you can often take a driving course to both have points removed from your license and to decrease your insurance. Show your insurance company evidence that you completed the course. Often, your rates will drop substantially. Do an online search to locate driving courses near you. Discuss your plans with your insurance company ahead of time to ensure that the company accepts the class you choose.
Prove You Did Not Cause the Accident
In some cases, your insurance company may raise your rates after you file an accident claim. Later investigation, however, may show that you did not, in fact, cause the accident. If you can prove that you did not cause the accident, you may prevent your insurance rates from going up and decrease your overall liability. In some cases, you may even get another party to pay, not only for the other driver’s expenses, but for the expenses you face after the accident.
If you believe you did not cause your accident, contact an attorney as soon as possible. An attorney can help collect evidence following your claim and show whether you actually caused the accident. If they find evidence of your innocence, it can substantially reduce costs associated with your accident.
Dealing with a car accident leaves you with plenty of expenses, including increases in your insurance premiums. By taking steps to reduce those increases—including by hiring a car accident lawyer to seek enough compensation to offset increased insurance premiums—you can protect your finances after an auto accident.