How Car Accidents Affect Insurance Premiums

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.

Related Blog Posts

Will I Qualify for Accident Forgiveness?
Accident forgiveness isn’t normally offered by automobile insurers, but this increasingly popular insurance offering can draw you in if you’re looking to save money on car insurance premiums.
What Do Auto Insurance Claims Adjusters Do?
If you’re in a car accident and want to file a claim with a car insurance company, then you’re likely going to be dealing with an auto insurance claims adjuster. Claims adjusters work for the insurance company to deal with claimants, investigate the details of the accident, check your coverage, and determine a settlement to cover your loss or damage.
National Impaired Driving Prevention Month
Did you know that December is National Impaired Driving Prevention Month? Every year since 1981 each President of the United States has dedicated this month to educating the public on the dangers of driving while impaired.
Winter Driving Tips
Winter is coming and in many parts of the country, winter weather can be unpredictable. Suddenly every day tasks like driving become more difficult due to snow, ice, or freezing rain. According to the NHTSA, 17% of all vehicle crashes occur during winter conditions. It is important to take extra precautions when it comes to driving in these circumstances.
Why to Consider Gap Insurance
While gap insurance isn’t required to be a part of your insurance policy, this type of add-on coverage can financially protect you from a total loss. If you owe more on your loan than your car’s current market value, you are considered “underwater” or “upside-down” on your loan. In order to avoid making payments on damages that exceed the value of your car, it may be worth it to consider adding gap insurance to your policy.