Post-Accident Rate Increase: Possibility And Extent

Your auto insurance rates will likely increase after an accident. The rate increase is not a punishment from insurance companies. Rather, post-accident rate increases reflect the changed circumstances and new risk determination. Below are factors determining the possibility and extent of a rate increase after an auto accident.

Accident Cause

Your auto insurance rates are sure to rise if you cause an accident. Even a single at-fault accident increases your rates. However, comprehensive insurance claims usually don't increase rates. For example, your rates might stay the same if you file a claim after a collision with an animal. However, multiple claims might increase your rates irrespective of their causes.

Insurance Company

Insurance companies differ on how much weight they place on different accident claims. Thus, some insurance companies increase rates by different percentages after an accident. Shopping around will help you find affordable coverage after a crash.

Your Age

Young drivers' inexperience and propensity for risky drivers make them more likely to cause accidents than older adults. Thus, younger drivers tend to witness higher rate increases than their older counterparts.

Prior Violations

The insurance company will analyze your insurance and driving history after an accident. Prior moving violations, insurance claims, and accidents mean you are a risky driver. A risky driver gets a bigger rate jump after a crash than a safe driver.

State

Your state influences your rate increase in two main ways. First, some states have insurance laws that determine accidents that trigger rate increases. For example, a state may determine that accidents that cause property damages less than $1,000 don't trigger rate increases.

Secondly, the cost of doing business and insurance rates vary by state. These factors determine insurance companies' risk exposure. Insurance companies with more risk exposures tend to increase rates more than others.

Accident Cost

Accident claims cost insurance companies money. The insurance company has to pay for your legal defense and compensate the accident victims. The more money you cost your insurance company, the riskier you are to them. Thus, accidents that result in extensive damages and costly injuries trigger higher rate increases than those with lower damages.

Type of Liability Claim

Bodily injury claims tend to cause insurance companies more money than property damages. Apart from medical bills, bodily injury attracts other damages such as lost wages, lost future earning capacity, pain, and suffering. Thus, bodily injury claims will likely increase your rates more than property damage claims.

If you have questions about your auto insurance rates, talk to a car insurance agent in your area.