Car accidents are expensive. Although insurance covers major damages, many drivers see the cost of their policy increase after an accident. In order to know how much car insurance will change after an accident, it is important to understand how premiums are determined in the first place.
A range of factors, including the driver’s age, the type of car and his or her location, determines the cost of an insurance policy. In addition to these variables, insurance companies will also factor in driving history. Driving history includes any previous moving violations a driver has had, such as speeding tickets and other traffic offenses. Any pervious accidents are part of that history.
After an accident, it is difficult to be definitive about specific increases because circumstances are different in each case. The cost will vary based on the type of plan and the other factors. Increasingly, many insurance companies offer some type of forgiveness policy. With a forgiveness policy, drivers are not penalized after their first accident, which means their rates will stay the same.
However, almost all insurance companies will raise rates after a second accident. To determine the increase, the insurance company will look at the driver holistically, assessing the overall risk of covering that driver. This will use previously mentioned factors like age and type of car, adding those risk factors to the increased accident filings. Because these factors vary so much from driver to driver, it is impossible to know definitively in advance how much an accident will impact the cost of coverage. On a whole, however, the average rate increase after a second accident is 86 percent.
It is important to note that while this increase may seem dramatic, it is not necessarily a lifelong cost. Most states only allow insurance companies to look at the last three to five years of a driver’s history, which means that rates should normalize again if drivers remain accident free for that period.
After a car accident, it is important to get appropriate legal advice. Be sure to contact a lawyer to handle all legal implications as soon as possible.