How Come My Car Insurance Went Up After No-Fault Accident?
After you are involved in an accident to which you are deemed not at-fault, you may have noticed that your renewal for car insurance went up in price. You may also be attributing this rate increase to your not at-fault accident. Depending on which state you live in, this is likely not the case.
The more likely reason your car insurance went up on renewal has nothing to do with you (in this case your not at-fault accident), but more to do with the fact that your insurance companies costs went up this year. You see insurance companies operate like a mutual in the sense that the “risk” is shared by their customers. To put it simply, if you are with an insurance company that happens to have more than their fair share of “bad drivers” that get into tons of accidents, and you have been accident free than you will still shoulder the burden of higher insurance premiums. Now your premiums won’t go up anywhere as much as those that have at-fault accidents, but it will still go up if you are with an insurer that is essentially doing poor underwriting or just having a bad year.
Now you may be saying “Why should I pay for other drivers?”. To put it short, because they pay for you. If you are ever involved in an accident the insurer goes to their pool of funds to pay for your claim. Think about it, if you are with your insurer for say five years and your annual premium is $985, after five years you have only paid $4925. Even if they slightly increase rates every year, say you end up paying $6,000 for the five years. If you are involved in a total loss accident where your $30,000 vehicle is deemed a write-off, where do you think the insurance company gets the money to reimburse you for your car? Not from you since in the five years you’ve been with them you have giving them $6,000. Keep in mind also the insurance company has overhead costs such as employees, office buildings and marketing to pay for as well.
What Should I Do?
If you notice your insurance company is continually raising your rates without cause meaning you have no at-fault accidents or tickets than you may want to compare rates from other insurers to make sure you are not paying too much. You may also want to call your insurance company to ask them why have my rates been going up when I have no accidents or tickets. If your talking to a customer service rep that knows what they’are talking about they’ll likely just tell you what I told you above.
