How Car Accidents Affect Insurance Premiums

Auto insurance companies like to boast “accident forgiveness” and “good driver” discounts because accidents have a huge influence on your annual car insurance rates. An accident, or lack thereof, can mean the difference of hundreds of dollars on your premium. Here are some things that you should know about insurance premiums and how they are measured so that you are well-prepared for the next time you are involved in an accident.

The Cost of Your Accident

The total cost of your accident is often examined by an insurance company. If you are not the one at fault, then you will be going through the responsible party’s insurance to resolve the claim. If you were the one responsible for the accident, then there may be damage to both yours and the other party’s vehicles that you will be expected to cover. Any time that the insurance company has to pay money on your behalf, it can take a toll on your insurance premium. How much your premium increases depends on your coverage as well as the cost of the accident. Whether you are the at fault driver, the amount of damage done to both vehicles, and the level of coverage that the responsible party has are all factors that insurance companies consider.

How the Insurance Company Views You

If you were involved in an accident, then you may be identified as a “high risk” because of the expenses that you caused the company. There is data showing that accidents are more likely in certain states, which is why many insurance companies will use your zip code to determine your base level of risk. This includes identifying whether you live in an area where there is a lot of traffic congestion, accidents, or high crime rate.
If you weren’t to blame for the accident, the insurance company may not identify you as high risk. They understand that accidents happen and therefore you may not be penalize. However, if you were at fault for the accident, then the insurance company will establish how risky you are to insure. This decision may be established once they look at why you were involved in the accident. For example, if you are a teenager, senior citizen, or you were driving under the influence, this may have an impact on the level of risk the insurance company categorizes you as. It will also play a role in how much your insurance premiums go up in order to continue offering you car insurance.

What You Can Do

You always have a choice in terms of your insurance provider and it’s important to periodically shop around for rates to make sure that you are still getting the best coverage and rate for your needs. If your insurance premium sharply increases following an accident, then you have the right to look into other companies and compare rates. Although it is impossible to fully avoid the financial consequences of a car accident, other companies might not penalize you as highly as your current provider.
If you have been insured with your company for a significant period of time, then you might be eligible for an accident forgiveness program if available. You may also be able to take a driver’s improvement course that shows that you’re willing to learn from your mistakes. These can also help you take points off of your driver’s record. When you show proof of taking the course, you may be able to reduce the cost of your premium. Although premium increases are not the best, you have a car insurance policy for a reason. Even if you get a rate increase after an accident, your coverage probably saved you money by helping to pay for post-accident expenses. If you have questions about your premium, contact your local Acceptance Insurance agent today to discuss your policy and your options.