Avoiding Insurance Rate Increases: Steps to Take After an Accident
If you’ve ever been involved in one, you know how stressful car accidents can be — both emotionally and financially. In addition to repairs, one of the biggest cost concerns for drivers after a crash is the potential increase in their insurance premiums. Depending on factors such as fault, claim amount, and driving history, even a single accident can cause a noticeable rate hike.
Fortunately, there are steps you can take to minimize, or potentially even avoid, an increase. From understanding why insurers raise rates, to leveraging accident forgiveness programs and negotiating with your provider, knowing how to navigate the aftermath of an accident can help you keep your insurance costs under control. In this blog post, we’ll break down what you need to do to protect your wallet while staying covered.
Why Do Insurance Rates Increase After an Accident?
The first thing you need to keep in mind about insurance companies is that they determine your rate based on risk. That’s why you may see your car insurance premiums go up after an accident, especially when you’re at fault. That said, there are two main reasons why your rates will most likely increase after a crash:
- Surcharges: Penalties for Risky Behavior
Surcharges are penalties that your insurer imposes when you’re responsible for an accident. But accidents aren’t the only events that trigger them — surcharges also result from traffic violations, late payments, or lapses in coverage. The exact amount varies by insurer and state regulations, but regardless of what it costs, a surcharge typically remains on your policy for three to five years. - Higher Risk Classification: Adjusting for Future Claims
Like we mentioned previously, insurance companies consider risk when they set rates. To do this, they classify drivers into categories based on their history. For example, if you’re involved in multiple accidents or frequently file claims, insurers will move you into a higher risk category. Statistically speaking, drivers in higher risk categories tend to file additional claims, which leads to increased premiums to offset potential future payouts.
However, not all accidents lead to the same rate hike. There are several factors that contribute to how much your premium may rise, including:
- Who was at fault: If you’re found fully or partially responsible, you’re more likely to see a rate increase. Some insurance companies offer accident forgiveness (more on this later) for a first-time at-fault incident.
- Claim amount: A minor fender bender may have little impact, but a claim involving major vehicle damage or medical expenses will most likely lead to a more substantial premium hike.
- Driving history: If you have a clean driving record before an accident, your insurer may be more lenient. On the other hand, if you already have multiple claims or violations, any increase could be more significant.
3 Crucial Steps to Take After an Accident
When accidents happen, the way you handle the aftermath can make a difference in whether — or by how much — your insurance rates go up. Taking the following steps immediately after a crash can help keep unnecessary premium increases to a minimum.
1. Document Everything
Thorough documentation will help support your case and prevent disputes. Make sure to:
- Take clear photos of all vehicles involved, license plates, road conditions, traffic signals, and any visible damage or injuries.
- Save dash cam footage if you have it — this can provide valuable evidence of what happened.
- Request a copy of the police report, as insurers reference it when determining fault and processing claims.
2. Notify Your Insurer Promptly
Even if the accident seems minor, report it to your insurance company as soon as possible. Failing to report an accident could lead to complications later, especially if the other party files a claim against you. Prompt reporting also ensures that you comply with your policy requirements, reducing the risk of policy cancellation or coverage denial at renewal.
3. Be Mindful of What You Say
In the aftermath of an accident, emotions run high, and it’s easy to say something that might be misinterpreted as admitting fault. Even well-intentioned statements, like “I’m sorry” or “I didn’t see your car” can fall into this category. Instead, stick to the facts of the situation and let the police and insurers determine fault based on evidence.
About Accident Forgiveness Programs
One way to protect yourself from a rate increase after an accident is by taking advantage of an accident forgiveness program. This benefit, offered by many insurers, prevents your premium from going up after your first at-fault accident. Specific eligibility requirements and availability will vary by provider.
What Is Accident Forgiveness & How Does It Work?
Accident forgiveness is a policy feature that prevents your insurer from applying a surcharge after a qualifying accident. While the particulars — and whether it’s offered at all — depend on the insurance company, most accident forgiveness programs:
- Apply only to your first at-fault accident within a specified time period
- Do not remove the accident from your driving record, just from impacting your insurance premium
It’s also important to note that while some insurers include accident forgiveness automatically as a perk for safe drivers, others require you to purchase it as an add-on. If you’re interested in accident forgiveness, be sure to check how your insurance company offers it.
How to Get Accident Forgiveness
There are a few different ways for accident forgiveness to be added to your policy, including:
- Having a clean record: Most insurers require three to five years without accidents or major violations.
- Being a long-term customer: Some companies reward customer loyalty by adding accident forgiveness to policies for free.
- Purchasing it: If your insurer doesn’t provide it automatically, you may have the option to add it for a cost.
Which Insurance Companies Offer Accident Forgiveness?
Not all insurers offer accident forgiveness, and in some states (like California) it isn’t even an option for drivers. However, some well-known providers include:
- Allstate: Offered as an optional add-on
- Farmers: Offered as an optional coverage
- GEICO: Free as a loyalty perk, or available as an add-on for eligible drivers
- Liberty Mutual: Can be added to policies
- Nationwide: Offered as a policy addition
- Progressive: Automatically applied for customers who have been with the company and remained accident-free for five consecutive years
When Should You Add Accident Forgiveness to Your Policy?
If accident forgiveness isn’t automatically included in your policy, you’ll need to purchase it before an accident occurs. The best times to add it are:
- When first purchasing a policy — if you’re switching insurers, ask whether accident forgiveness is included.
- At renewal — this is also a good time to reassess your coverage needs and add any other protections.
Minimizing Rate Increases: How to Negotiate With Your Insurer
If your insurance premium jumps after an accident, don’t assume you have to accept the new rate without question. In some cases, you may be able to negotiate a lower rate or dispute an unfair increase. Here’s how to advocate for yourself and keep costs as low as possible.
Contact Your Insurer to Review the Rate Increase
In the event that you’re faced with a higher premium, call your insurance provider to understand the exact reason why your rate went up. During the conversation:
- Ask whether the increase was due to the accident alone or if other factors (such as inflation or industry-wide rate adjustments) played a role.
- Verify that all details about the accident are correct, including fault determination and claim amounts.
- If an error is found as a result of the conversation, request a correction and provide any supporting documentation (such as a police report or claim records) needed.
Leverage Your Clean Driving History
If this is your first at-fault accident and you have an otherwise clean driving record, use that to your advantage. If you don’t already have accident forgiveness protection in place, some insurers may be willing to reduce the surcharge — especially if you’ve been with the company for a while. Emphasize:
- The number of years you’ve been accident-free
- Your history of on-time premium payments and policy loyalty
- Any defensive driving courses you’ve completed, which some insurers recognize as a factor in reducing risk
Consider Switching Insurance Companies
If your current insurer won’t budge on the rate increase, it may be time to shop around for a better deal. To find the best rate possible, compare quotes from multiple insurers or work with a broker. For example, at C&S insurance, we’re able to shop for today’s best coverage programs and rates on your behalf thanks to our relationships with top carriers.
Alternative Ways to Keep Insurance Costs Low
Even if you aren’t able to negotiate your way out of a rate increase, there are other avenues you can explore to help offset the extra cost and lower your overall bill.
- Increasing your deductible (the amount you pay out of pocket before insurance kicks in) is one of the quickest ways to lower your monthly insurance payment. Just make sure you have enough savings set aside in case you need to file a claim.
- Bundle your policies under the same provider. Many insurance companies offer discounts when you take out multiple policies (such as homeowners, renters, motorcycle, etc.).
- Take advantage of available discounts, such as good driver, low mileage, defensive driving, and pay-in-full savings.
- Practice safe driving habits and maintain a clean driving record to keep premiums to a minimum.
- Taking a safe driver course can sometimes lead to a rate reduction, depending on your insurer and state regulations.
- Insurers frequently take credit scores into consideration when determining rates. If yours is low, improving it can help you secure a lower insurance payment.
FAQs
Q: Why do car insurance premiums go up after an accident?
A: There are two main reasons why rates tend to increase after a crash: Surcharges (penalties that insurers impose on at-fault drivers) and increased risk of future claims. Drivers in higher risk categories tend to file additional claims, so companies increase their premiums to offset potential future payouts.
Q: How much does auto insurance increase after an accident?
A: Exact amounts will vary depending on your unique circumstances. However, in general, at-fault drivers see their premiums grow by as much as 45%. For drivers who aren’t deemed responsible for their accidents, rates may increase by 10% at most.
Q: How long will my accident impact my car insurance rate?
A: The general rule of thumb is that for as long as an accident is on your driving record, it will impact your insurance rate. While accidents can stay on your record for years, the exact length of time will depend on the state and the type of violations associated with each crash.
Q: How can I avoid an insurance increase after an accident?
A: There are a few different strategies you can use to try to avoid premium increases after an accident, including negotiating the new rate with your insurer, adding accident forgiveness to your policy when you sign up or renew, or shopping for a new carrier.
Q: Is accident forgiveness worth it?
A: Whether accident forgiveness is a worthwhile addition to your insurance depends on your unique situation. For example, if you and the other drivers on your policy are safe drivers with clean driving records, it may not be worth the added expense. Conversely, if anyone on your insurance has a risky driving history, you might want to consider adding it.
While an accident can lead to higher insurance premiums, there are plenty of ways to try to minimize the impact and keep your policy costs manageable. The key is understanding your options, taking proactive steps, and choosing the right coverage for your needs.
If you’re looking for the best auto insurance rates, we’re here to help. Get in touch with our team of auto insurance experts today for a personalized quote and to explore the best policy options for you.