By default, an accident will affect your car insurance premiums. Ordinarily, a claim after you’re involved in a car accident will increase your car insurance on the next policy renewal. After an accident, and a claim, the questions you’ll be asking will include; by how much or for how long will your insurance be affected.
You’ll also be asking yourself, “when does car insurance go down after an accident.” Read on to understand this question and more.
By How Much Will Your Insurance Go Up After An Accident?
Before you are able to answer how long your insurance will stay up after an accident, you should know how much it increases after the accident.
It’s challenging to predict how much your insurance rates will be after an accident. Having an accident or a moving violation on your driving record will typically cause your car insurance premium to increase. However, how much it increases depends on a number of factors, such as:
- Who was at fault
- The seriousness of the violation or damage
- Cost of the claim
- Your insurance provider
- Your state
- Prior accidents or moving violations on your record
- Your age
Note: Even if all these factors are put together, the rate increase of your car insurance premiums will still vary because there is no constant rate increase calculator. In most cases, the rate increase can be 50% of your current car insurance policy, and in some extreme cases, the rate increase can go up to 70%.
Why Does Car Insurance Rate Go Up After An Accident?
Insurers don’t raise premium rates to punish clients after an accident but adjust rates to reflect the new data that the client has given them. The interpretation of the new data is what judges if the client should get a rate increase or not.
Note: The increased amount of premium on top of your previous car insurance is called a surcharge. Insurance providers include the surcharge after a chargeable accident or moving violation.
Insurers can trigger the surcharges after an accident or moving violation because of one of the following reasons:
a) The fees that cater for filing a car insurance claim
The costs or fees related to surcharges triggered by an at-fault accident include:
- The claim adjuster’s time
- Claim representatives’ fees
- The costs of parts and labor
Insurers don’t usually account for these fees in your monthly premium, which means they can increase if you utilize them. This is why premium rate increases help drivers to know when they should forgo making a claim and settle their problems out-of-pocket, particularly if it’s a minor car accident.
b) Additional risk
Insurers use your historical data to determine your risk level. For instance, drivers who’ve had an accident or a moving violation before are more likely to be involved in another moving violation or accident. Insurers classify these drivers as high-risk drivers, which translates to potentially more expenses as compared to drivers with clean records.
To account for this increased risk, insurers simply increase the cost of car insurance coverage for these drivers. The increased cost is meant to deter them from careless driving.
When Does Car Insurance Go Down After An Accident
The amount of time car insurance stays up goes hand in hand with how long the car accidents stay on your record.
On average, a car accident will stay on your driving record for between 3 to 5 years. But the exact time depends on the severity of your accident and your state.
For example, after an at-fault collision or violation in Arizona, car insurance stays on the driver’s record for as long as 3 years, while the same stays on your record for 5 years in Oregon.
If you’re involved in a reckless driving crash or a DIU, the incident can stay on your record for between 7 to 10 years.
Note: If the accident occurred long before the policy renewal date, insurers could stretch the penalty period beyond the typical 3-to-5-year window. For example, if the accident’s penalty period expires in January, but your policy’s renewal date is in June, most insurers will not remove the accident record on your policy until the policy renews.
It is recommended that if you have an accident on your driving record, you should keep track of the chargeable period because your insurance provider may overlook this period. By this, you may avoid an extended surcharge period.
Can I Add Accident Forgiveness To My Policy After An Accident
You should consider adding accident forgiveness to your car insurance policy after the accident falls off your driving record. This will help you avoid another surcharge should you get involved in another accident.
Some insurers offer accident forgiveness coverage automatically with your car insurance policy. However, other insurance companies can offer insurance coverage as an add-on or a combination with your car insurance policy.
Additionally, most insurance companies usually require that a driver stays accident or claim-free for some time (usually three to five years) before receiving accident forgiveness.
How Can You Lower Your Policy Rates After A Car Accident?
After a car accident or a moving violation, apart from how long it will take the rates to go down, the bigger question is usually how to get the lowest possible premium.
After the accident or violation is off your record, finding lower rates for your car insurance policy can be challenging. First of all, you may not qualify for accident forgiveness immediately, and secondly, your risk estimation is still high.
However, you can still find lower insurance rates after a surcharge. You may need to speak to your insurance agent to try and find possibilities or insurance discounts that can lower your premium rates. You can qualify for insurance discounts under the following situations:
- When you drive fewer miles than outlined on your policy
- When you are a good student with good grades
- When you’re working in a given service-related occupation such as healthcare, teaching, or the military
The other ways to use to lower your car insurance premiums after an accident include:
- Increase your insurance deductible because the higher your deductible, the lower your premium will be.
- Improve your credit ratings because they are often used in determining your car insurance rates.
- Lower your insurance coverage: Cut down your coverages but ensure you do this only if you need to lower your insurance premium. Also ensure that you do not go below the state-required coverage.
- Shop around for lower car insurance premiums: When you shop around you’ll be able to find the best prices from different insurance companies. Make a decision based on the figures you can find. You’ll also find different coverages and discounts from different insurance companies.
- Consider a different (cheaper) car: If you are driving an expensive car, which is expensive to insure, you can consider a cheaper car, which is also less expensive to insure.
An accident will always increase your insurance premium rates. However, the rates increase highly depending on your car, state, the severity of the accident, or who is at fault. After the accident is off your record, you can lower your premium rates if you consider the available discounts.