How Do Accidents Affect Auto Insurance Rates?

Most auto accident victims assume that they will see an increase in their auto insurance rates. While these drivers may have good cause for concern, not every accident results in a hike in auto insurance rates. Several factors go into how insurers evaluate their policy holders after they file an accident claim. These factors can include the type of policy the customer holds, the extent of the accident, any injuries that may have occurred, and the policy holder’s driving record.

Auto Insurance Rates and Accident Severity

The extent of an accident is often the “foremost factor” in evaluating auto insurance rates after an accident, according to online insurance provider Esurance. Accidents involving injuries are among the most severe. These claims can include medical care expenses and auto repair costs for both the policy holder and any other drivers involved. When such a major accident occurs, drivers can expect to see higher auto insurance rates for several years after the incident.

Auto Insurance Rates and Driver Fault

Another major factor in determining an increase in auto insurance rates comes when the investigators determine which driver was at fault for an accident. In most cases, the driver who was not at fault will not see higher auto insurance rates after an accident. The insurer will recover their funds on any claim from the other driver’s carrier, which will not affect the non-fault driver’s rates. However, if the other driver was at fault and was not carrying insurance, the insured driver may see higher rates depending on the type of accident claim filed with the insurer.

Auto Insurance Rates and “No-Fault” States

Drivers in a dozen states may be forced to deal with higher auto insurance rates after an accident, regardless of who was at fault. These states have “no-fault” laws, which remove any dispute over which driver was at fault in an accident. In these states, any injury claim will typically result in higher auto insurance rates. These states are:

• Florida
• Hawaii
• Kansas
• Kentucky
• Massachusetts
• Michigan
• Minnesota
• New Jersey
• New York
• North Dakota
• Pennsylvania
• Utah

Auto Insurance Rates and Driver History

Drivers with spotless driving records prior to an accident may escape seeing an increase in their auto insurance rates. Insurers consider drivers with clean records a lower risk, so they reward these policy holders with lower auto insurance rates. If the drivers have only had a single accident, they may also see their rates decrease over time. Drivers with multiple accidents are considered higher risks, so insurers may either raise their rates or drop their policies entirely due to the higher risk.

Source: Nerd Wallet

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