When you get into a car accident, you are subject to an increase in your base car insurance. You may find that your rates rise even though you didn’t’ cause the accident.
According to the DMV, they buy car insurance in order to protect themselves from the financial risk of suffering an injury or fatality. Ultimately insurance companies are risk-averse. When a driver gets into an accident, regardless of fault, they are automatically viewed as a risk factor. In order to offset this, the insurance company might impose surcharge which will typically be an incentive to be a more careful driver. Furthermore, incurring a rate increase because of an accident and the amount increased will vary from company to company. However, according to the DMV, many states have insurance regulations that prohibit an insurance company from raising driver’s base premium if the driver is not at fault, or if the driver files a claim under comprehensive coverage.
Furthermore, claims filed under your uninsured or underinsured motorist coverage results in surcharges that apply to your premium, even though you didn’t cause the accident. When your insurance company has to pay you, it is likely that they’ll pass some costs down to you by imposing a surcharge. It is important for you to know details about their car insurance policy. When you apply for car insurance, ask which situation will lead to increased rates.
“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 violation and/or insurance claims, you may have no premium increase at all,” said Loretta Worters, Vice President of the Insurance Information Institute.
However, if you’re to blame, or your insurance company feels that you’re a liability even though the multiple car accidents you’ve been in is not your fault, your premium will increase. Don’t panic just yet because there are ways in which you can stop the insurance company from increasing your premium. First and foremost, tell your insurer about the accident, no matter how small it was. Failure to report a minor accident will cause your premium to rise if the other driver sues you. Furthermore, ask the insurance company if your policy includes an accident forgiveness clause. Some insurers believe that accidents are simply a part of life and they’re willing to forgive you and not raise your premium.
“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.”
Lastly, If there’s nothing you can do about a rising premium, simply increase your deductible in order to lower the amount of your premium. Increasing your deductible could reduce your car insurance coverage cost by at most 40 percent. However, before you do this, ask yourself if you’ll have $1,000 to spend if you get into another car accident.