How Does An Accident Affect My Car Insurance?

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Want to know what happens to your insurance when you get into a car crash? This guide will explain what happens to your auto insurance rates when you are involved in a not at-fault accident and when you are involved in an at-fault accident.

Are You Not At-Fault or At-Fault?

The first thing you need to know is whose fault is it? This is usually told to you by your claims adjuster. Remember though it is not up to the claims adjuster to decide who is at fault, rather it is the police who decide. The police will do an investigation into the accident and file a report deciding who is at-fault, the claims adjusters will then use this information to determine how you will be paid out.

Somebody call the Police.
Somebody call the Police.

Not At-Fault Accident

A big misconception is that when you get into a car crash and it is not your fault your rates will increase. Some people are even afraid to notify their insurance company that they have been an accident, for fear that they will have their rates increased. This is absolutely false. Your insurance rates will not go up solely based on your not at-fault accident. Please re-read that sentence again before we continue.

Does this mean that when you go to renew next year it will cost the same as last year? No. There are many other reasons an insurance company can raise your rates, for instance, to cover their increased costs due to a recent hurricane. But so that we’re perfectly clear, insurance companies are not allowed, under any circumstance, to raise your rates as a result of a not at-fault accident.

Having said that, however, if you get into multiple “not at-fault accidents”, usually more than three, they can ask you to increase your deductibles. But again, they will not raise your rates. So if you are involved in a not at-fault accident and your vehicle is severely damaged, please make your insurance company cover the costs of repair as that is what you are paying them for.

At Fault Accident

If you are involved in at-fault accident your auto insurance rates will likely increase on renewal. Now there are special exceptions, for example, if your insurance company offers “accident forgiveness” coverage then your rates will not go up for your first at-fault accident – but be damn sure they will be going up on your second at-fault accident. By how much your rates go up depends on your insurance company. As each company differs on how much they charge, you can see increases from anywhere from 10% to 50%.

Also keep in mind that if you are involved in multiple at-fault accidents, usually more than two or three, your insurance company will non-renew you. This means that they will terminate coverage on your vehicle on your next renewal, leaving you to seek coverage with a non-standard auto insurer -which is a company that insures higher risk drivers (or as good drivers like to call them “bad drivers”).

When you are forced to take insurance with a non-standard insurer you are likely going to have to pay a surcharge for each at-fault accident you are involved in. What’s a surcharge you ask? A surcharge is the exact opposite of a discount. It’s an increase based on a specific percentage multiplied by your premium. For example, if you have 3 at-fault accidents in the last five years, you may see a surcharge of 30%. This means if your premium was $1,000 per year, it’s going up by $300 to $1,300 per year. Remember that each non-standard insurer charges a different surcharge so it is best to shop around for the lowest price.

How Long Does an Accident Remain on my Driving Record?

Insurance companies order driving reports that have your entire driving history recorded since you started driving. Yes, I know scary. Every accident, every insurance company, every policy number and every vehicle you have ever had is presented on this document. Luckily for you, insurance companies only go back five years when rating you, so that crashes that occurred over five years ago will not affect how they rate you today.

How to Determine If Accident Still Affects You

Keep in mind the start date of when to go back is based on your inception date (or renewal date), that is the day that you started the policy or the day you renewed your policy. For example, if your insurance with Amco Insurance started on June 8th 2007 and you had an at-fault accident September 21st 2007 that accident would still count against you on your policy renewing June 8th 2011. This is because that accident was still within 5 years of your inception date of June 8th 2011. Even on your next renewal which would be June 8th 2012, you would still be charged for that accident. The unfortunate thing is that even when five years are up, say on September 21st 2012, you will still be rated as if you had that at-fault accident until your renewal next June 8th 2013. If your head is spinning here’s a diagram.

Pro Tip: Exactly five years after your last at-fault accident, call your insurance company and ask them to re-rate you as your accident should no longer be counted against you. Many insurance companies will give you a mid-term re-rating, though some will be a pain about it. Either way it doesn’t hurt to ask.

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