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If you've recently been involved in a car accident, you may worry about what it'll do to your auto insurance premium. Ultimately, the insurer's decision will depend on the type of accident and who's at fault.
Here's what to know about how an accident could impact your car insurance rate and how to obtain affordable insurance if yours goes up.
How an Accident Affects Your Auto Insurance
Auto insurance is designed to provide financial protection in the event of a covered loss, such as a collision, theft or vandalism.
Auto insurance companies consider several factors when setting rates, two of which are your driving record and your claims history. When you get in an accident, it'll show up on your driving record, even if you didn't cause it.
If there's sufficient damage, you may also need to file a claim with your insurer to protect yourself. That said, the impact on your rates will depend on the type of collision, the severity and cost of the damage, who's at fault, your driving history and your insurance provider.
How Do At-Fault vs. No-Fault Accidents Affect My Rate?
If you're determined to be at fault in an accident, your insurer may choose to increase your policy premiums because your fault in the accident may be viewed as a sign of risky driving. That said, a major accident with significant property damage and serious personal injuries may result in a much larger rate spike than, say, a fender bender.
If you didn't cause the accident, you may still see your premium rise. As unfair as that sounds, here's why that might happen:
- Statistics: Keep in mind that it all comes down to risk, and even a not-at-fault accident can increase the likelihood that you'll get in an accident again in the future.
- No-fault state requirements: Some states may require you to file a claim with your insurance company regardless of who's at fault. If you live in a no-fault state, your premium may go up simply because you had to file a claim.
- Insufficient coverage: If the driver who caused the accident doesn't have enough insurance coverage—or they have no coverage at all—you may need to tap your policy's uninsured/underinsured motorist coverage. If this happens, your insurance company may choose to increase your policy premium.
What Should I Do After an Accident?
Once you've been in an accident, it's crucial that you take stock of the situation before reaching out to the authorities and your insurance provider. Here are some steps you can take:
- Check for injuries. Try to stay calm and check yourself and others in your vehicle for injuries. Then, check with the other driver and their passengers to determine if they're safe.
- Move out of traffic. If your vehicle is operable, move it out of traffic to minimize the chances of further collisions. Turn on your hazard lights and, if you have them, set up cones or road flares to alert other drivers.
- Report the accident. Call the police to report the accident. When an officer arrives, provide your driver's license and insurance details, along with the facts of what happened. Note that if you can't get a police officer to the scene, you can exchange insurance information with the other driver and report directly to the police station or the department of motor vehicles.
- Take photos. In addition to the police officer's photos, it's important to document the accident on your own. Taking pictures of both vehicles from multiple angles will give your insurer the information they need to determine fault. Be sure to also capture any conditions that may have impacted the accident, such as weather or other hazards.
- Exchange information. Get the name, address, phone number and insurance information from the other driver so that your insurer can contact them. If there are witnesses, it can also help to get their names and contact information.
- File a claim. Reach out to your insurance company to start a claim. An agent will guide you through the claims process and help you get any assistance you need.
Learn more >> Steps to Take After a Car Accident
How Long Does an Accident Stay on Your Driving Record?
An accident will only impact your car insurance rate as long as it remains on your record, which is usually between three and five years, depending on where you live and your insurance company.
If you're unsure about what to expect, you can contact your state's department of motor vehicles and your insurance carrier to get more details for your situation.
How to Avoid a Rate Increase After an Accident
While accidents often result in rate hikes, that's not always the case. If you're not at fault and don't need to file a claim with your insurer, for instance, your premium may not be impacted at all.
Additionally, some insurance companies offer what's called accident forgiveness. The terms for this coverage will vary by insurer, but it's usually an optional add-on coverage that you can buy in certain states, and it ensures that your premium won't go up after your first accident, even if you're at fault. In some cases, you can get accident forgiveness for free if you're a longtime customer with no accidents or violations on your record for several years.
Some insurers may also offer small-accident forgiveness as a customer benefit, which means your rate won't go up if your first claim is under a certain dollar amount.
How to Find Affordable Car Insurance After an Accident
While your rate may have gone up after an accident, that doesn't mean you can't find savings. Here are some steps you can take to reduce your car insurance premium:
- Shop around. Each insurance company has its own approach to setting policy premiums, so it's possible that you can still qualify for better terms with another insurer. Experian can help you compare insurance quotes from top insurers to make it easier to find the right one for you.
- Reduce your coverage. Check your policy to determine if you can safely reduce your coverage amounts. For example, if your vehicle is old, paid off and you have enough savings to replace it if you get in another accident, it may not make sense to keep your collision and comprehensive coverage. Alternatively, you may choose to increase your deductible, which is how much you pay when you file a claim before your coverage kicks in.
- Ask for discounts. Every auto insurer offers a long list of discounts to reward customers for, among other things, driving safe vehicles and practicing safe driving habits. You may also qualify for discounts based on the organizations you belong to. Call your insurer to see if there are any discounts that aren't currently being applied to your policy and see if you can qualify for them.
- Maintain good driving habits. Even if you've made some missteps, you can improve your chances of getting lower rates in the future by practicing good driving habits now. If you're trying to get your rates down, another accident (or more moving violations) will only work against you.
- Improve your credit. While your credit isn't directly related to your driving habits, insurance companies in many states factor it into your rate calculation. Credit-based insurance scores use the information in your credit report to help insurance companies calculate how likely you are to file an insurance claim. If you can improve your credit score, it could help you as you shop around for a lower rate in the future.
Taking these steps can take some time, and you may not start seeing results immediately. But over time, they'll provide you with opportunities to save on car insurance, regardless of which insurance company you choose.
Improving Credit Can Provide Other Positive Results
Improving your credit can be an excellent way to reduce your car insurance rates, and it can also provide other positive results for your finances.
Experian's free credit monitoring tool can make it easier to improve your credit by providing you with free access to your FICO® Score☉ and Experian credit report. With these resources, you can identify opportunities for improvement and keep track of your progress.