When shopping for the best car insurance, drivers choose mainly based on price, service, and reputation. But one element that’s often overlooked is a company’s “surcharge schedule” — a predetermined premium increase that’s charged if you cause a car accident.
According to the data, drivers who made claims in 2017 saw their policy premiums increase by an average of 44.1%. The study looked at the impact of claims worth $2,000 or more and compared premium increases in all states.
Once you’ve reported an accident to your insurance company, your rates may increase. This will depend on a variety of factors including:
If the accident was not your fault, there is a good chance that your insurance company will not raise your rates. However, if you have had several accidents (even no-fault) your may see a bump in your bill.
The increase depends on many factors. Insurers once followed the Insurance Services Office’s (ISO) standard of increasing a premium by 20 to 40 percent of the insurer’s base rate after an accident. However, that’s no longer the case.
Now, you may see premium increases above 40 percent depending on the situation. Insure.com recently investigated the topic and found that the average car insurance rate increases for one at-fault accident varies greatly by state. The biggest rate increases according to the analysis are California (92 percent), Delaware (78 percent), and Massachusetts (72 percent). Those are on the high end. Most states are much less and closer to 20 or 30 percent.
|State||Average annual car insurance rate||Average annual rate after
one at-fault bodily injury accident
|District of Columbia||$1,628||$1,971||19%|
*Methodology: Rates are from six insurance companies for 10 different ZIP codes in each state. Averages are based on insurance for a single 40-year-old male who commutes 12 miles to work each day, with policy limits of 100/300/50 ($100,000 for injury liability for one person, $300,000 for all injuries and $50,000 for property damage in an accident) and a $500 deductible on collision and comprehensive coverage. This hypothetical driver has a clean record and good credit. Average rates are for comparative purposes. Your own rate will depend on your personal factors and vehicle. Data commissioned by Insure.com from Quadrant Information Services.
Surcharges vary by state and insurance company, and some penalize you for moving violations while others only on “chargeable accidents.”
Much like bankruptcy, an automobile accident can haunt your financial affairs for years to come. While this depends on the state you live in, you may see higher car insurance rates for 3 years after an accident. Throughout the 3 year window (assuming you’ve had no other accidents), you should see the rates returning to your pre-accident costs. However, car insurance rates in general tend to rise each year, so you may not see as profound a difference as you’d hoped for.
First, your auto rates are only expected to surge if you are at fault in an accident. If someone else is at fault, the full claim is almost always handled through their insurance company – not yours.
Obviously, that means the easiest way to avoid a huge bump in your premiums is to drive safely and avoid accidents when you can.
Of course, life happens, which is why we have insurance in the first place. It’s not always feasible or possible to avoid accidents or claims of any kind. But in the face of surging premium costs, it’s smart to weigh your options before you file a claim on your insurance.
If you have a minor repair with a cost that’s close to your deductible, it may not make sense to file a claim and see your rate go up. It might make more sense to pay for the damage yourself upfront, rather than file an insurance claim and pay significantly higher premiums for the next few years.
If you caused an accident, here are some steps you can take try to keep your rate down: