How Much Do Car Insurance Rates Go Up After An Accident? – Forbes Advisor

November 7, 2022

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Car accidents can have lasting financial consequences. Even if you have a spotless driving record, causing an accident can lead to significant increases in your car insurance rates. According to Forbes Advisor’s analysis, the national average rate increase is around 45% for property damage accidents and 47% for accidents resulting in injury. Let’s explore how a car accident affects your insurance rates and what you can do to mitigate the impact.

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Understanding the Impact of a Car Accident on Insurance

When you cause an accident, your auto liability insurance comes into play. This insurance covers property damage or injury caused to others. If a claim is filed against your liability insurance, you may experience a “surcharge,” which is the actual rate increase following an accident.

Reading: How much your insurance increase after accident

It’s important to note that the surcharge will typically take effect when you renew your policy. Insurance companies are not allowed to increase your rates in the middle of a policy period. If you decide to switch insurance providers, the new company will review your claims history and driving record to calculate your new rate accordingly.

Car Insurance Rate Increases After an Accident

Forbes Advisor conducted an analysis of the average rate increases from 10 major auto insurance companies for at-fault accidents resulting in property damage or injury. The findings revealed interesting variations among insurers:

State Farm had the lowest average rate increase for at-fault property damage accidents at 21%, while Geico had the highest increase at 73%.
USAA, exclusively available to military personnel and their families, had an average rate increase of 40% for drivers causing property damage accidents. However, their total cost remained the lowest at $1,600 per year.
Allstate proved to be the most expensive option for drivers causing property damage accidents, with an average annual rate of $3,103.

When it came to accidents resulting in injury, the average rate increases varied slightly among the analyzed companies:

State Farm had the lowest increase at 22%, while Geico had the highest increase at 77%.
USAA remained the most affordable choice, with an average increase of 41% and a yearly rate of $1,613.
Allstate continued to be the most expensive, with an average annual rate of $3,133.

It’s crucial to shop around for auto insurance prices if you’ve caused an accident. While the rate increase is significant, the total premium you’ll pay should be the primary focus.

Car Insurance Rate Increases by State

The average rate increase for drivers who cause accidents varies by state due to differing laws governing auto insurance rates. Forbes Advisor’s analysis revealed some notable findings:

Wyoming drivers experience the lowest average rate increase after property damage and injury accidents, with a 31% raise.
North Carolina drivers face the highest average increase in property damage accidents, with a staggering 79% raise.
California drivers witness the largest increase for causing an injury crash, with a 97% raise.

Factors Affecting Accident Severity and State Laws

The severity of the accident and resulting insurance claim costs can influence the rate increase. Minor accidents in parking lots generally have less impact than serious accidents. Additionally, some states have regulations preventing rate increases for claims below specific dollar amounts.

For example, in Massachusetts, claims below $1,000 won’t result in a surcharge. Similarly, in New York, no surcharge is applied if there were no injuries and the total damage is under $2,000. However, recurrent accidents of this nature may lead to higher rates.

Will My Car Insurance Rates Increase If I’m Not at Fault?

In most cases, car insurance rates only go up if you cause an accident resulting in damage or injury to others. Situations that typically won’t increase your rates include:

Your car was involved in a hit-and-run accident.
Your legally parked car was damaged.
Your car was rear-ended, and you weren’t convicted of a moving traffic violation related to the accident.

Claims paid by comprehensive insurance, such as those for collisions with animals or damage from falling objects, usually don’t result in a rate increase either. However, having a history of comprehensive claims may make insurers perceive you as more likely to file future claims, potentially leading to higher premiums.

How Long Will an Accident Affect My Auto Insurance Rates?

The duration of an at-fault accident’s impact on your rates depends on your insurance company and state laws. Generally, the effects last for three to five years. Some states and insurers offer reduced surcharges for each year you drive without incidents or additional at-fault accidents or moving traffic violations.

Lowering Your Car Insurance Rates After an Accident

If you receive a surcharge due to a car accident, there are several ways to reduce your auto insurance bill:

Ask for Discounts

Check with your insurance company for potential price discounts. Going paperless or no longer commuting to work can often qualify you for lower rates.

Test Your Safe Driving Skills

Recovering from an at-fault accident involves practicing safe driving. Consider opting for usage-based insurance programs that track your driving actions and provide tips for improvement. Good driving scores may lead to discounts.

Compare Prices

If you’re unsatisfied with your current insurer’s prices or service, compare auto insurance quotes. Shopping around can help you find better rates. While a new provider may still impose an accident surcharge, they could beat your previous company’s rates.