How Does a Car Accident Affect My Insurance Premium?

5-7 minute read | Published: March 28, 2024 | Updated: April 17, 2024

✅ Verified & Reviewed

high insurance premiums

If you had a car accident in the past then statistically speaking, you’re more likely to have another one. Insurance companies know this, which is why they often raise their insurance rates for these individuals, to cover the risk.

Put simply, whether you were at-fault or not, a car accident can impact your premium.

So, if you have made multiple insurance claims in the last couple of years, then you can expect a much higher premium. Conversely, if you have not had a claim for a few years, then you will be able to enjoy better rates.

Here are some of the factors that impact your insurance premium after an accident:

Who’s at Fault?

There are various ways to determine fault in a car accident. If the police are at the scene, they will file a report which will include their opinion on fault. However, since not all accidents will have police presence, there will be instances where the responsibility of determining fault falls to the insurance companies.

When you file a claim, it gets assigned to an insurance adjuster who will then investigate the case thoroughly – researching the accident, talking to witnesses, reviewing medical attention, reports and assessing vehicle damage. Once the investigation is complete, the adjuster will be able to determine who was at fault.

When Did the Accident Happen?

Your accident can shape your insurance rates for years as insurance companies often consider it a predictor of future behavior. That said, they will take into consideration the time between the accident and when you apply for insurance coverage. If you maintain a clean record after your first accident, your rates will decrease over time, albeit gradually. However, if a second accident occurs shortly after the first one, the increased rates may stick around for MUCH longer.

Severity of the Accident

The seriousness of a car accident can affect how high your insurance rates go up. A fender bender might lead to a smaller increase compared to a totalled car. Insurance companies also consider the extent of the damage and who was accountable for the incident. If you’re not at fault in a major accident and the other driver’s insurer is able to cover the damages, then the rate increase may not be as high.

Your Driving History

The Department of Motor Vehicles (DMV) maintains a record of your driving history, including violations, citations, license points, and accidents. Insurance companies use this information to assess your risk as a driver, which will then determine your premiums.

This agency provides two types of driving history reports: a 3-year history and a 10-year history. Most violations stay on record for three years, while serious ones like license suspensions and DUIs can stick around for at least ten years.

How Much Do Insurance Premiums Increase After an Accident?

The amount of increase depends on various factors most of which have been discussed above. In addition, young drivers may also face steeper hikes in their premiums as they’re considered a high-risk group.

I’d like to add that while rates will likely go up after an accident (regardless of fault), the exact increase varies. It’s best to shop around and compare quotes from various providers to find the best coverage at the most affordable rate.

Will the Insurance Premium Increase If the Accident Wasn’t My Fault?

If the accident was not your fault, it’s natural to assume that your insurance rates won’t be affected. But insurance companies often consider other factors beyond fault when determining premiums.

One key consideration is whether your insurance company had to cover your claim settlement. Even if you were not at fault, if your insurer paid for the damages, they may view you as a high risk driver.

auto insurance claim

The extent of the rate increase can vary depending on your state’s regulations and your insurance provider’s policies. Some states have laws prohibiting insurers from raising their rates for non-fault accidents, while others allow it – to some degree. Also, insurance companies have their own guidelines for adjusting their insurance rates after an accident.

To give you an example using data from Quadrant Information Services, premiums for full coverage insurance soar by $840 following an at-fault accident. Before an accident, the average annual premium for full coverage was $2,014, and $622 for minimum coverage.

However, after an at-fault accident, these figures change significantly. Full coverage premiums jump to around $2,854, while minimum coverage premiums increased to $892.

The difference in premiums before and after an at-fault accident is 42% (for full coverage) and 43% (for minimum coverage).

Weather-caused accidents can strike unexpectedly, urging caution and preparedness for safer travels amidst unpredictable conditions.

How Long Do Car Accidents Stay on Your Record?

If you’ve been involved in multiple accidents or have multiple traffic violations, insurance companies may consider you a high-risk driver, which in turn leads to higher insurance rates. Now, if the accident involved a serious injury, extensive property damage, or intoxication, the increase could be even more substantial. In fact, some insurance companies may outright prevent you from renewing your insurance policy.

traffic violations

Insurance companies often look back 3-5 years into your driving record when determining rates. During this period, you may be slapped with car insurance surcharges due to the accident. It will stay on your record for 3 years if it was minor, but if it was a serious crash, it will remain on your record for 10 years. Know more about the specific time frame for your state by checking your state’s Department (or Bureau) of Motor Vehicles website.

Category: Dealing with Insurance