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The financial aftermath of an accident can stick with you for years, but it doesn’t last forever.
Generally, accidents and traffic violations stay on your driving record for three to five years. The more accidents or tickets you have on your driving record, the higher your auto insurance premiums will be.
How much insurance can go up after an accident depends on the carrier, who’s at fault, and several other factors. The cost for an auto insurance policy could go up as much as 30% or more after an accident, says Laura Adams, an insurance expert and host of the “Money Girl” podcast.
While that is often an inevitable consequence, you can take action right away to mitigate the negative effects. The first thing to do when you take to the road again after an accident? Be very cautious.
“One very important thing to remember when you are in the middle of waiting out an accident surcharge is to drive safely and conservatively,” says Howard Goldberg, vice president of customer solutions for Plymouth Rock Assurance, a regional insurance company in the Northeast. “Stay violation-free and accident-free in order to avoid the unpleasant experience of starting the clock over.”
Then, it’s time to go online or pick up the phone, and minimize the consequences to your insurance rate.
Here’s what you need to know about what happens to your auto insurance after an accident.
How Much Will My Insurance Go Up After an Accident?
Just about every auto insurance company will increase your rates after an accident, but it’s hard to say exactly by how much, according to Adams.
“Accidents are definitely going to make rates go up,” says Adams. “Accidents are typically more expensive than moving violations.”
Most states use a point system to track violations by drivers, and typically, points will accumulate on your driving record if you’re in an at-fault accident or several, or if you’re convicted of certain traffic violations.
“It’s the points on your driving record that the insurance companies see as a red flag and a reason to raise your rates,” says Adams.
Every insurance company assesses accidents differently; a rate increase after an accident on your auto insurance can be as low as $200 or as high as $800, depending on your insurer. To give you a better picture, we rounded up Bankrate’s average rates for full coverage before and after an auto accident; take a look below to see the differences in rate increases for 11 auto insurance companies.
You may be able to avoid a big rate increase by switching to another auto insurance company. While an accident or violation will still follow you for three to five years, another auto insurer may still be able to beat your current rate.
|Car Insurance Company||Average Annual Premium for Full Coverage Before an Accident||Average Annual Premium for Full Coverage After an Accident|
Why Do Insurance Rates Go Up After an Accident?
For insurance companies, it’s all about risk. The more driving risk you demonstrate, the more you might have to pay for your auto insurance premiums.
Following an accident, you’ll typically file a claim and pay out your deductible. Your insurer will adjust your rates after an accident to reflect any new information they have on your driving history. In many cases, the rate increase — also known as an “accident surcharge” — won’t be applied until it’s time to renew your policy.
“If your policy renewal is months away, you won’t experience any financial impact aside from the deductible until the renewal date,” says Goldberg.
An accident doesn’t always mean your auto coverage will become outrageously expensive. Some insurers may be lenient if it’s your first accident and not your fault, especially if you’re enrolled in an accident forgiveness program with your insurer, says Adams.
If you’re enrolled in an accident forgiveness program, your auto rates won’t go up after your first at-fault accident. Some insurance companies offer it as a free benefit to loyal customers with good driving records. New drivers or drivers with bad driving records may have to pay a monthly fee to be enrolled.
“Some cases, you have to pay extra for that. In some cases, it’s just something they offer as part of their policy,” says Adams.
Many major auto insurers have accident forgiveness programs, including Allstate, GEICO, Progressive, USAA, and Nationwide.
How to Lower Your Car Insurance Rate After an Accident
Whether you’re anticipating an accident surcharge, or already paying one, there are things that you can do to lower your auto bill, short of simply waiting.
- Ask for discounts: Check with your insurance company about available discounts. For example, you may be able to bundle your home and auto insurance, take a defensive driving course, or get a discount for having certain safety features in your car.
- Be a safe driver: The best way to recover from an accident where you were at fault is to practice safe driving and avoid more accidents or violations, especially for the three years after your accident, when it’s crucial to avoid additional violations and at-fault accidents. Another accident or violation on your record during that period will be especially costly.
- Adjust your coverage: Beyond discounts, you can always look into adjusting your coverages and deductibles to bring your auto premium more in line with your budget. But be careful when weighing your options; you want to make sure you have enough coverage to protect yourself.