Worried about the cost of car insurance after an accident? You’ve likely heard this story before — a friend or family member gets in a crash, and a few weeks later, their insurance company notifies them that their rates are going up. If that ever happens to you, it’s important to know what your options are.
So how does a car accident impact insurance and what can you do about it? We explain the essentials, starting with how much car insurance costs before and after an accident. Keep reading to learn more.
How accidents impact your insurance
On average, car insurance costs slightly under $1,700 a year, but there’s plenty of variation around those average rates. Costs differ significantly based on where you live and your driver profile.
Insurers consider multiple factors when determining premium rates. Your age, typical driving mileage and violation history all contribute. So does the number of accidents you’ve had, especially if insurance adjusters deemed you more than 50% at fault.
When you have an at-fault accident, most insurers will raise your rates. According to Car and Driver, the average increase after a claim is $767 — close to half the average rate for drivers with clean records.
Why do insurance rates skyrocket when you’re involved in an accident?
When you buy car insurance, you enter into an agreement with the insurer. You agree to pay a certain amount per year and in exchange, your insurance provider commits to covering costs associated with accidents.
The more likely you are to have an accident, the riskier that agreement is for the insurer. Insurance companies try to mitigate that risk by charging premiums based on your driving history and behavior.
Each accident increases your perceived risk, particularly at-fault accidents. An at-fault accident will almost always lead insurers to raise your rates to account for that higher risk.
How an accident forgiveness program can help
Some insurance companies offer accident forgiveness programs as incentives for new or existing customers. When you enroll in one of these programs, the insurer agrees to ignore one or more accidents when calculating your premium.
Accident forgiveness programs don’t eliminate crashes from your driving record nor do they guarantee that future insurers won’t consider those accidents when determining your premium. However, they can save you hundreds or even thousands of dollars on coverage after an at-fault accident.
Some insurers include accident forgiveness as part of a standard policy, though that policy’s cost may be higher by default. Other companies offer accident forgiveness as a paid add-on.
You may have to meet certain requirements to enroll in accident forgiveness. Many insurers restrict the program based on policyholders’ driving histories. If you’ve had an accident or moving violation within the past several years, you may not qualify. Some companies also restrict accident forgiveness to their long-time customers.
Your insurance company can provide details about its accident forgiveness program if it has one. Ask about restrictions and how many accidents the program covers. Some policies will only forgive one accident.
Does the accident remain on your driving record forever?
Fortunately, no. Your state’s department of motor vehicles (DMV) will remove an accident from your driving record after a certain amount of time has passed. That time frame is usually between three and five years, depending on the state.
So, how long does a car accident stay on your insurance record? It depends on where you live. For example, the Ohio Department of Public Safety retains collision information for three years. Oregon retains accident details for a minimum of five years. Incidents involving intoxication and other serious traffic violations may remain on a driver’s record permanently.
How to get cheap insurance before an accident
Finding affordable insurance for a car accident is easier when your record is clean. The lower your risk to insurers, the less you’ll pay in premiums.
Unfortunately, getting cheap coverage is harder now than ever before. A recent surge in traffic accidents has driven an industry-wide car insurance price increase. Between rising rates of accidents and overall inflation, many policyholders will see their premiums jump in 2023. Finding coverage that is the best value for your situation is critical.
Here’s how to switch car insurance to get the most affordable rates.
Comparison shopping is key to getting the best possible rate. Even if a particular company is well-known for offering low annual rates, get quotes from at least three insurance providers.
Don’t only look at premiums. Consider the coverage you get for a certain premium and the deductibles you’ll have to pay. Be aware that an advertised price may not include all the coverage options you need.
Also, look for specialized discount programs. Some of the best auto insurance companies offer discounts for certain drivers or cars. For instance, Amica offers discounts for anti-theft and installed safety devices in cars and Farmers has essential worker and first responder discounts.
Finally, consider customer satisfaction by looking at online reviews on trusted third-party sites and the more traditional method of asking friends if they like their car insurance.
Look at more than just big-name insurance companies
The best cheap car insurance might not come from a company you know. Smaller and lesser-known companies often provide top-notch coverage and programs that are hard to find elsewhere. For example:
Root has programs that customize your premium based on how safe or how much you drive, based on data from an app you install on your phone.
The General provides basic coverage for higher-risk drivers, with extras available as opt-ins.
You may also find quality affordable coverage from a local or regional provider. These providers serve customers in select areas only.
If you’re an American Automobile Association (AAA) member, your local chapter can provide a list of local insurers with member discounts.
Check how much it will cost after the accident
Premium increases are difficult to predict because they vary based on your coverage and driving history. When comparing quotes, call the insurers or their agents and ask about premium increases after at-fault or no-fault accidents. Some states raise your rates after no-fault accidents, though the increase will be less.
What are rates like in your state? Check out our article on which states are the best and worst for auto insurance rates.
How do you get cheaper insurance after an accident?
Although you usually pay more for car insurance after an accident, you’ll have time to shop around before that increase happens. Insurance rates increase at the end of your insurance term when your policy is up for renewal. You can look for new insurance or talk with your current insurer about options to keep your rates down.
Whichever option you choose, here’s how to reduce your car insurance costs after an accident.
Improve your credit
Insurance companies base your premium partially on how well you manage your money. One tool they use in this process is the credit-based insurance score, similar to the consumer credit score that determines your loan interest rates or credit card eligibility.
According to the Fair Isaac Corporation (FICO), the analytics company that determines credit scores, 95% of insurance companies use credit-based insurance scoring to determine an applicant’s premiums.
An insurance score includes data from your credit report, such as your payment history and how much you owe on each credit or lending account. If you pay your bills on time and haven’t applied for new loans or credit cards recently, your report will usually work in your favor.
If you’ve had credit hiccups, improve your borrowing behavior before applying for insurance after a car accident. That means:
Pay all your bills on or before the due date
Avoid applying for new credit
Keep card balances below 30% of your limit
Pay down high-balance credit cards
Also, check your credit report for errors. Every consumer qualifies for one free credit report yearly from the three national credit bureaus — Equifax, Experian and TransUnion. Read each report closely and dispute any errors you find.
Look for add-on discounts
You can sometimes lower car insurance premiums by signing up for discounts — even if you’ve recently had an accident. Available discounts may include:
Anti-theft or safety devices
Safe driving behavior (based on data collected via an installed device or app)
Defensive driving course completion
These discounts are often available as add-ons to an existing policy, though you will probably have to wait for renewal to sign up.
Ask your insurer what discounts are available on your policy, and how much each one would save you after an accident. Compare these across multiple policies, including your current one.
Raise your deductible
Your car insurance deductible is the amount you pay for repairs after an accident. Once you’ve paid your full deductible, your insurance company covers the rest of the claim. If the repair cost is less than your deductible, you’ll pay the entire amount.
Generally, the higher your deductible is, the less you’ll pay in auto insurance premiums. Increasing your deductible can often make up for a rise in your premium — a potentially useful trade-off if you’ve had an accident.
Most insurance policies have multiple deductible types.
Collision: Coverage for crashes with other vehicles or stationary objects, such as parked cars or highway barriers
Comprehensive: Coverage for events out of your control, including acts of nature, theft and vandalism
Underinsured/Uninsured motorist: Coverage to fill the gap if the at-fault driver has insufficient insurance
Personal injury protection: Coverage for medical bills if you sustain a bodily injury in an accident
You can adjust the deductible for each applicable coverage type based on your needs and risk tolerance. For instance, if you think you’re more likely to have an accident than be the victim of theft, you might raise your comprehensive deductible but leave your collision coverage alone.
That said, raising any deductible is a gamble. Avoid increasing it to a level your budget can’t sustain. You’re on the hook for that deductible if you have to make other accident claims — and you can’t predict when that will happen.
Car insurance alternatives for at-risk drivers
If you have accidents or speeding tickets on your record, finding affordable car insurance is harder.
Insurance is mandated in all but two states — New Hampshire and Virginia. To go without insurance, New Hampshire drivers must prove they have the financial resources to cover damages in an at-fault accident. Virginia residents must pay a $500 fee to drive without insurance, at the driver’s financial risk.
Since at-fault accidents can cost tens of thousands of dollars, it’s safer for almost all drivers to buy insurance even if it’s not mandated. One option is to look for policies that welcome high-risk drivers.
Geico is known for offering affordable premiums to high-risk drivers.
Direct Auto may reduce your rates if you take a safe driving course.
Nationwide has comparatively lower rates for drivers with speeding tickets.
Finally, remember to consider non-standard insurers like The General, which customizes offers for high-risk drivers.
Summary of how much insurance may increase after an accident
The more you know about what happens with insurance after a car accident, the more prepared you will be in the unfortunate event of a crash. Keep these key points in mind:
Most companies raise your auto insurance rates after an accident.
The nationwide average increase is $767, but individual amounts vary based on the driver and their situation.
A car accident affects insurance rates for three to five years or more, depending on where you live.
An accident forgiveness program may prevent your rates from going up, even after an at-fault accident.
Shop around to get the best possible coverage before an accident. The lower your premium before an incident, the lower your costs will be afterward.
You can reduce your premium after an accident by adjusting your deductible, searching for discounts and improving your credit.
Some insurers offer special programs for at-risk drivers. Shop around if you have an accident on your record.
Driving safely is the best way to keep your insurance rates affordable. But when accidents happen, controlling your premiums can keep you afloat until your record improves.