Why Accidents Impact Car Insurance Rates

If you have a car wreck, then you might have to file a car insurance claim. Still, one of the side effects of doing so is that your rates might rise as a result of the claim. However, higher rates are not guaranteed after a claim, which is why it helps to be honest with your agent when you start this process.

Still, having too many wrecks will make the likelihood of higher premiums all but certain. The reason for this is simple: People with a lot of claims cost insurers a lot of money. The insurers must make up this cost loss by charging the highest premiums to those with the highest driving risks.

What Factors Drive Rates Up After Accidents?

When you make a claim on your auto insurance policy, you force your insurer to pay money on your behalf. Therefore, you are a higher cost risk to them, as opposed to someone who has never filed a claim. You might see your rates rise as a result.

Still, to determine whether a claim will automatically lead to higher rates, just call your insurance agent. They can help you understand key factors that might impact your rates, such as:

  • The Severity of the Accident: Significant vehicle damage, personal injury to another person, or loss of life are high-risk situations, and will cost a lot of money. Therefore, they will cost insurers a lot more money.
  • Fault for the Accident: If you cause an accident, then you clearly demonstrate that you are a high insurance risk. As a result, your rates are likely to rise. However, if another driver was at fault for an accident, but you were forced to claim damage on your own policy, then your insurer often won’t raise your rates.
  • Frequency of Claims: The more claims you make on your auto insurance, the more you are going to cost your insurer. Therefore, your insurer is likely to continue to raise your rates with each claim.
  • Your Reliability as a Customer: If you have been with your insurance company for years, then they know you, understand your habits as a driver, and can get a better feel for your reliability even after you file a claim. Therefore, long-term customers often see comparatively lower rates when placed next to other drivers.

Additionally, the cause of an accident will be a major factor in whether your rates change. Were you speeding, or were drugs and alcohol contributing factors? If so, your insurer will naturally view you as a high coverage risk, and you are most likely to see a massive rate increase as a result.

Still, even if your rates rise after an accident, you can work with your agent to stabilize your premiums for the future. They can help you tap into various discounts and other cost savings mechanisms which might not have been available to you.