If you’re reading this article, you may have gotten into a car accident recently. We hate to give you more bad news, but even if you weren’t injured, you may feel some pain in your pocket the next time your car insurance is up for renewal.
How much does car insurance go up after an accident?
Car insurance companies often raise premiums for drivers who have recently been in an accident — but not always.
“If the accident is not your fault, it’s the first in which you’ve been involved, and your driving history is free of moving violations and/or insurance claims, you may have no premium increase at all,” says Loretta Worters, vice-president of the Insurance Information Institute.
However, if you’re to blame, or your insurance company feels that you’ve just been in too many accidents (even if none have been your fault), your premium will likely increase. In fact, it may even double. A recent Forbes Advisor analysis reports an average premium increase of 45% for accidents with property damage and 47% for those with injuries.
Similarly, a 2022 analysis by Insurance.com revealed a national average rate increase of 52% after an at-fault accident. These premium hikes generally stick around for three years.
Before you panic, here’s some advice on how you can put the brakes on any premium increases after you’ve been involved in a car accident.
Tip #1: Talk to your insurer first
Car insurance premiums depend on a number of personal details like your age and driving history. Additionally, your unique surcharge, which is the fee added to your premium following an at-fault accident (it may also follow a ticket, late payment, etc.), can fluctuate based on a variety of factors, such as your specific insurer, the state you live in, and the severity of the accident.
For this reason, after any kind of accident, no matter how small, it’s imperative that you contact your insurance agent immediately to see how it will affect your premium. This eliminates the stress of getting an unexpectedly high bill in the mail and gives you — and your budget — time to adjust.
Tip #2: Look for the “accident forgiveness clause”
The auto industry’s rule of thumb is that most drivers will have three to four accidents in their lifetime. Because some insurers have accepted that accidents are simply a part of life, many are willing to ignore your first mishap and not raise your premium.
That’s where an accident forgiveness clause comes in. It’s an add-on to your policy that ensures your premium won’t go up after your first accident. The catch, of course, is that it needs to already be part of your policy — you can’t get into an accident and then ask to add it on. However, there is a possibility you may already have an accident forgiveness clause and not even know it.
“The details vary by company,” says Worters. “Some may give you accident forgiveness immediately, while others will only do so after you’ve been an accident-free policyholder for as many as three to five years. They also may require no moving violations for three years.”
Just keep in mind it’s not a 100% get-out-of-jail-free pass. There are limits to accident forgiveness, such as it only being good for one accident per policy (not per driver on the policy). Additionally, even if your insurance premium doesn’t go up, the accident will remain on your driving record — which means future insurers could see it and set your rate accordingly.
It’s also not offered by every insurer, nor is it even available in every state.
Tip #3: Shop for a new policy
If you’re still not happy with your renewal rate, use our resources to shop for a new car insurance policy. In fact, it’s a good idea to browse competitor sites in search of a lower premium every so often, whether you’ve been in an accident or not.
Insurance rates fluctuate all the time, so staying with the same company year after year can prevent you from saving money elsewhere. In general, you should compare quotes before you renew your policy and whenever you experience a relevant life change (you purchase a new car, add or remove a driver from your policy, move out of state, etc.). You won’t be penalized for swapping policies every so often, but research thoroughly before you make any changes. And be sure to ask about any cancellation fees.
Here are a few tips to keep in mind as you shop around:
- Bundle your home and car insurance — Premiums vary substantially from company to company, but if you have home insurance through another provider, include it on your list of potential car insurers. You can get a discount by “bundling” your home and car insurance with the same company.
- Pay attention to the company’s reputation — Keep in mind that money shouldn’t be the only factor when making your final decision. “Select an insurance company that has a reputation for good customer service and is financially stable,” says Worters. “Check consumer publications and your state insurance department for customer satisfaction surveys and find out if they are financially stable through rating companies such as AM Best.”
- Use a policy aggregator — Companies like Policygenius and Credible can help you find a new policy because they compare personalized quotes from multiple insurance providers all in one location. No need to hop around from site to site to find the best deal.
- Ask about your insurer’s loyalty discount — Before you commit to a new policy with a different insurance provider, ask if your current insurer offers a loyalty discount. Canceling your coverage will obviously disqualify you from receiving this benefit, so make sure you know what you’re saying goodbye to before you make the switch.
- Ask about a cancellation fee — Some auto insurance providers, but not all, charge a fee if you cancel your coverage before the policy expires. It’s more likely that you won’t be charged, but it’s always best to check with your provider before you make any changes.
As a final tip, wait until your at-fault claim is closed before you consider switching insurance providers, and be truthful about your driving history as you shop. Potential insurers will ask you to report any accidents and moving violations you’ve received over the last few years. Don’t lie. They’ll discover all reported accidents or tickets in their databases.
Use our form below to easily find the best car insurance providers operating in your area.
Tip #4: Increase your deductible
If your insurance company does raise your premium, you can still lower the amount by increasing your deductible (the amount you’ll pay after you file a claim and your insurance kicks in).
For example, according to the Insurance Information Institute (III), increasing your deductible from $200 to $500 could reduce your car insurance coverage cost by 15% to 30%. And jumping to a $1,000 deductible can save you 40% or more.
But before you do this, make sure you’ll actually have the $500-$1,000 to spend if you get into another accident. (This is a good reason to build up your emergency fund).
Tip #5: Take advantage of other discounts
Insurance providers offer a wide variety of discounts for their customers, but if you want to take advantage of these perks, you have to ask.
Here are some of the most common discounts offered by auto insurance companies.
- Low-usage discount — If you are an infrequent driver, you could qualify for a low-mileage, low-usage discount (note this type of discount typically requires you to sign up for a driver monitoring technology).
- Loyalty discount — Your insurance provider may lower your rate if you’ve been a long-term customer.
- Affiliation discount — If you are a student, military personnel, or senior citizen, you may be eligible for certain discounts. Many insurance providers also have affiliations or partnerships with certain universities or trade organizations, so you could receive a discount based on your school or employer.
- Multi-car discount — You may be eligible for a multi-car discount if you own more than one vehicle and insure your cars under the same policy.
- Billing discount — You can receive some auto insurance discounts based on the way you pay for your coverage, such as if you pay your policy in full and/or sign up for electronic billing.
- Safety features discount — The type of vehicle you own and the features that come with your car can also impact your premium. Ask your provider if they offer discounts for any of the following: anti-theft devices, anti-lock brakes, safety features like airbags and seat belts, and new vehicles.
Tip #6: Reduce your coverage
Three out of every four drivers purchase collision and/or comprehensive coverage, but that doesn’t necessarily mean three out of four drivers should.
Reducing your coverage is an easy way to dramatically decrease your premium, but it’s not a wise move for every driver. Here are a few reasons you should consider dropping your collision and/or comprehensive coverage:
- The cost of the additional premium you pay for comprehensive and collision coverage exceeds 10% of the book value of your car.
- You have an older, paid-in-full vehicle.
- You have saved enough money to replace your car in the event of an accident.
- Based on where you live, work, and drive, you aren’t concerned about the following threats: weather-related damages, animal-related accidents, and auto-related crime.
Here are a few reasons you should consider keeping your collision and/or comprehensive coverage:
- If your car is financed or leased (odds are your lender requires collision and/or comprehensive coverage).
- You have a new vehicle that you could not afford to replace in the event of an accident.
- Based on where you live, work, and drive, you are concerned about one or more of the following threats: weather-related damages, animal-related accidents, and auto-related crime.
- You live in a state with a high percentage of uninsured drivers (FL, MS, NM, MI, TN, AL, WA, IN, AR, D.C.).
Tip #7: Take a driving class
You probably thought you saw the last of driver’s ed when you were 16. But if you dust off your old notebooks and take a refresher driving course, your insurance company may see this as a sign that you’re looking to improve your driving skills — and they may show mercy on you come renewal time.
“It won’t help if you were caught driving recklessly or under the influence,” says Worters. “But otherwise, it might help reduce rates. Don’t wait for your insurance company to ask you to do this. Do it on your own and tell them about it.”
Chargeable vs. unchargeable accident
Although a car accident will likely affect your insurance premium, it may not. The circumstances of your accident matter, and there are certain types of accidents that shouldn’t impact your insurance rates.
The following incidents will likely result in an increased premium:
- You caused the accident, which resulted in property damage.
- You caused the accident, which resulted in injuries.
- You have been involved in additional car accidents before (fault is often irrelevant if you have multiple accidents on your record).
The following incidents likely will not impact your premium:
- Your car was hit/damaged while legally parked.
- You were rear-ended by another vehicle but did not receive a traffic violation.
- Your car was damaged in a hit-and-run accident for which you were not at fault.
- You have accident forgiveness (varies based on your insurer and policy).
- The accident was minor, not your fault, and the first on your record (varies based on your insurer).
The state you live in can also impact your premium after an accident. In some states, your premium can increase even when you’re not the driver at fault. In other states, your premium only increases if the claim exceeds a certain dollar amount. Talk with your insurer to find out the terms of your specific policy.
Car accidents can be stressful for a number of reasons. There may be damages to your car and/or another vehicle. Perhaps you’re dealing with whiplash or worse. Unfortunately, you may face another frustrating side effect when it’s time to renew your insurance coverage: a premium hike.
Insurance premiums often spike after an accident, sometimes as much as double your original rate. If you’re the driver at-fault, you can definitely expect to pay more for your policy, but your rates may rise no matter who’s responsible for the fender bender.
Fortunately, there are several ways to save on your premium. Ask your insurer about available discounts. See how reducing your coverage and/or increasing your deductible could affect your premium. Additionally, you can (and should) shop around for a better deal at least once a term, but make sure you’re honest about your accident(s) when requesting quotes from competitors.
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