Accidents increase premium rates. It’s standard insurance practice. When you’re involved in an accident, it sends a message to your carrier that you are a high-risk individual.
Most drivers know that your insurance premiums will increase on the next renewal if you’re involved in an accident and at fault. However, even if the car accident is not your fault, your insurance premiums may still increase.
Why will your insurance rate increase if you’re not at fault? Let’s find out.
What Factors Decide Whether My Insurance Rates Go Up?
Whether your insurance provider will raise your premiums often vary by the particular insurance carrier and state laws. However, there are some factors insurers consider, such as:
- Fault during an accident: If you’re at fault, your insurance rates will likely increase. If you’re not-at-fault, insurers can still find ways of increasing your rates.
- The severity of the accident: Insurers use an accident’s overall severity and cost of claims to determine whether to increase your rates.
- Policy details: If your car insurance policy includes an accident forgiveness clause, it means your insurer can’t raise your premiums after you’re involved in an accident.
- Your driving history: Car insurers like safe drivers because they are less risky and good for business. If your driving history goes several years without moving violations and accidents, your insurance provider may not raise your premiums after a minor accident.
What Does At Fault Mean?
After you’re involved in an accident, the police will investigate and assign fault in their report. The at-fault driver is the driver whose actions led to the accident or caused the accident.
But the police report can also divide the blame between the two drivers. For instance, the police can allocate 50% fault to you and 50% fault to the other driver or 41% fault to you and 59% fault to the other driver.
Insurance companies use police reports and details of the accident, in addition to their own investigation to determine if you’re at fault or not. They further determine fault based on state laws.
Whatever the fault outcome, the provider realizes, your insurance premiums may increase by the virtue of being in an accident, regardless of who is at fault. However, the claim payout rate and premiums increase will depend on the fault and the state’s laws.
How Do At-Fault And No-Fault Accidents Differ?
When it comes to insurance laws, there are two categories of states:
- At-fault States
- No-fault States
At-fault states have at-fault insurance laws. Often, these states don’t require PIP insurance coverage in their laws. The at-fault states hold that the at-fault driver is responsible for paying for all property damages and the other party’s medical expenses using their car insurance.
For example, Arizona is a fault-state with an at-fault insurance system. If you (or your actions) cause a car accident in Arizona, you’re also responsible for paying for the medical expenses and related damages arising from the accident.
In No-fault states, the driver’s own insurance will pay for the medical expenses after an accident. This applies equally to all parties involved in the accident regardless of who’s at fault.
No-fault states require drivers to have PIP (Personal Injury Protection) coverage. PIP helps to pay for your hospital bills or medical expenses and costs after an accident, regardless of who was at fault. It may also include lost wages.
For example, suppose someone hits you in a no-fault state. In that case, your insurance company is responsible for paying for any medical injuries and hospital bills if you sustain injuries, even if you’re not at fault. This is why your rates may go up during the next renewal when the provider reviews your policy.
Can You Make a Claim If You Are Not At Fault?
If you are not at fault, whether or not you can make a claim depends on your state and the type of insurance you have.
If you’re in a fault state, you can’t make a payout claim after an accident when you’re not at fault. The other driver’s (at-fault driver) insurance will pay for your medical expenses and damages.
However, you can make a claim if you have personal injury protection. If you make a claim, your insurance premiums will likely go up on the next renewal when the insurer reviews your policy. Any claim is an indication of high risk to insurers.
If you are in a no-fault state, you’ll be having a PIP, which will pay your medical expenses related to the injury you sustain during the accident, regardless of who is at fault. This will most likely make your insurance go up.
What If The At-Fault Driver Doesn’t Have Insurance?
If you’re involved in an accident with an at-fault driver who doesn’t have car insurance, you can use your Uninsured Motorist coverage (UM).
This means that even if the accident isn’t your fault, your provider is still liable for the injuries and damage to your car sustained in the accident through your uninsured motorist coverage. The UM coverage covers you when the at-fault driver lacks any coverage or when his coverage isn’t enough to cover for your injuries and losses from the accident.
Unfortunately, this kind of business increases the insurer’s cost of doing, and the insurer normally passes the cost to customers. This is why your premiums cost will increase the next time you renew your insurance with the company. This may apply even when you buy insurance with another company as long as the record is still valid.
What You Can Do If Your Insurance Rates Go Up
When your insurance carrier increases your rates after an accident (chargeable accident), the actual amount of insurance increase is called a surcharge. Since the insurer can’t apply the surcharge in the middle of your current policy period, you’ll likely find out whether you were surcharged at the next renewal time.
This is why if, after filing a not-at-fault claim, your insurance provider raises your rate, you should shop around for a new insurance carrier.
When shopping for a new carrier, you should ask the prospective insurance company if they surcharge clients for a not-at-fault accident. You may opt for a slightly higher policy quote if the available cheaper one carriers a hefty surcharge amount using such information.
How Long Does A Surcharge Stay On Your Car Insurance Rates?
The amount of time the surcharge takes on your record depends on your insurance company and your state. Typically a surcharge lasts three to five years.
Besides, depending on your insurance carrier and state, your insurance policy’s surcharge could decrease yearly. However, this may be contingent on you driving each year without an accident or any surchargeable events. For instance, if your state only evaluates your three-years driving record, such as Arizona, the surcharge amount will be non-existent after three years of safe driving.
Some states usually require – or give drivers as an option – the no-fault insurance, also called PIP. If you have a no-fault-insurance, it will help you pay for your and your passengers’ medical bills if you’re involved in an injury-related accident, no matter who is at fault. But, your insurer may take the amount it pays toward these expenses into account when determining whether your rate will change after you file a claim.