How Does An Accident Affect My Auto Insurance? :PaydayLV

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You might think that your auto insurance is simple.  You have a deductible, insurance covers most things that might happen to your car, and mostly don’t worry about the rest. 

However, your premiums depend on your driving record.  Two people with exactly the same car in the exact same town could have wildly different auto insurance premiums because one of them may have one or several accidents on their record. 

Let’s remove some of the mystery around how insurance companies review accidents and which ones affect your insurance premiums.

How Does An Accident Affect My Auto Insurance - Payday LV

What Types Of Accidents Do Insurance Companies Look At?

There are technically three types of insurance claims.  Almost anything that can happen to your car will fall into one of these categories.

  • At-Fault Accidents: If you have an accident and are deemed “at fault,” it means that something you did caused the accident whether you intended it or not (most people don’t intend to have an accident, by definition).
  • Not-At-Fault Accidents: If you get into an accident and you were found not-at-fault, you may not have to worry about increased insurance premiums. This is not the case all the time, however.
  • Comprehensive Claims: These claims involve anything that happens to your car that doesn’t involve another vehicle. Depending on your insurance coverage, this could be theft, flood or other natural disaster, hail, glass damage, hitting a deer, etc.  If you have several of these, you may see an increase in your premiums simply because the algorithms the insurance companies use tell them you’re a higher risk.

No-Fault States

There are some states that are called “no-fault” states, which means the driver or drivers who are party to a vehicle accident submit a claim to their insurance, and the fault is not a factor in the claim.  The upside to this system is lower litigation, however medical expense coverage in accidents where one driver is clearly at fault may only be limited to the amount in each driver’s insurance policy.

At-Fault Accidents

If you are deemed at fault, you can generally expect your insurance premiums to increase.  Single accidents may not necessarily cause huge increases, but some insurance companies may increase annual premiums by up to $800, or $67 per month.

Another name for an at-fault accident is a “chargeable” accident.  Insurance companies typically have a rule that, if you’re at least 50% at fault or caused a certain amount in damage, it is a chargeable accident, and it will certainly affect your premiums or even cause the insurance company to drop your policy entirely as too risky.

Accidents That Don’t Affect Insurance

There are specific cases where your vehicle may be damaged, but you are not only not-at-fault but also may not see your premiums go up.

  • Your parked car was damaged by someone else
  • Your car was hit from behind and you weren’t written up for a traffic violation
  • Hit-and-run accidents
  • Hitting an animal
  • Falling objects while driving

If you were in an accident and were not at fault, make sure you have either a police report the clarifies you were not at fault, the other driver’s insurance company accepts fault, or the driver provides a written statements saying they accept fault.

How Does Accident Forgiveness Work?

While not every insurance company has an accident forgiveness policy, some do and you should check your policy to find out what the specifics are.  Some states don’t even allow accident forgiveness.

The policy might revert if you have only one accident on a policy and a specific amount of time has passed without any reported incidents – meaning accidents or moving traffic violations – within a certain period of time, usually three to five years.

Final Thoughts

Getting into an accident is certainly no fun, especially if you were injured in the accident.  Be sure to fully understand your policy and what is covered before going for a drive because there may be specific steps you must take if you’re in an accident, and missing one of those steps could cause big issues when you submit a claim.

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