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- If you're at fault for an accident, your car insurance premiums may increase.
- Even if you aren't at fault, your rates might rise.
- Most accidents will stay on your driving record for an average of three to five years.
- See Insider's guide to the best car insurance companies.
The point of auto insurance is to have protection in case an accident happens. We all hope it never will because we see our rates spike, almost immediately. But it can be much messier in the short and long-term if you don't have coverage. This includes coverage for you and any other drivers (like young teens) in your household. Much depends on the state you live in and whether you were "at fault."
Regardless, many drivers look at the big picture. Is the car still driveable, and how extensive is the damage? What state was the car in before the accident? This is just a small sampling of what insurers consider when setting your rates. However, if your deductible is $500 and the claim is $750, it just wouldn't be worth it for the average consumer.
How Long Does A Car Accident Affect My Auto Insurance Rates?
Felipe Teixeira, director of national auto product at COUNTRY Financial, told Insider that generally filing a claim for an accident when you're "at fault" suggests you are a riskier driver. He said a premium increase is data-backed and the amount of increase varies based on driver behavior.
Teixeira said much depends on the insurance carrier and your driving history.
Liability car insurance is required by law in all states except New Hampshire with varying details by state. New Hampshire residents have other options to prove "financial responsibility."
The Insurance Information Institute names four categories of liability insurance: no-fault, choice no-fault, tort liability, and add-on. The big differences are restrictions on the right to sue and which insurer pays for first-party benefits regardless of fault.
There are 12 "no-fault" states and Puerto Rico. In these states, "every driver [has] to file a claim with their own insurance company after an accident, regardless of who was at fault" according to the Insurance Information Institute. These states include: Florida, Michigan, New Jersey, New York, Pennsylvania,Hawaii, Kansas, Kentucky, Massachusetts, Minnesota, North Dakota, and Utah. To be clear in these instances, fault will be determined later on. If you're only carrying liability coverage, you'll have to wait for the other party's insurance to pay out.
New Jersey, Pennsylvania, and Kentucky have a "choice" no-fault law that allows drivers to reject the lawsuit threshold and keep the right to sue for auto injuries. If you're considering refusing in these states, Insider recommends speaking to a licensed attorney in your state.
If You Were Not At Fault, Will Your Auto Insurance Rates Increase?
Teixeira said if you were involved in a minor fender bender, chances are your rates won't increase. If it's small enough that you never file a claim or generate other reports, your auto insurer would have no reason to raise your rates. However, if you were not at fault, but have been in a bunch of accidents, it varies by carrier.
He said that your indication of risk to come will be a factor and you may be charged a higher premium, even if you were not at fault. Your state laws will also play a role, as some states have laws against increasing premiums for drivers who are not at fault.
If your car insurance company offers accident forgiveness, it may help you out. However, most require that you have been accident-free for at least five years to be eligible for accident forgiveness.
How Long Will Accidents Stay on My Record?
Every state handles this differently, but typically three years is the average time an accident stays on your driving record. For example, the New York DMV keeps "accidents and most traffic convictions are only displayed until the end of the year in which the accident or conviction occurred, plus 3 additional years." However, "vehicular homicide, may be displayed permanently."
If you're charged with a DUI or caught driving without insurance, higher rates and restrictions will last longer. In some cases, the state will require an SR-22 for any driver convicted of a DUI. In some states, the state will also pursue uninsured drivers including occasional teen drivers driving their parents' car, requiring an SR-22. To be clear, insurers will automatically multiply your rates if the state requests this documentation.
In conventional terms, an accident will remain on your record (and insurance) for three to five years. However, some auto insurance companies have begun using predictive underwriting. Drivers under these plans may notice unexpected increases in their rates and policy non-renewals when the algorithm finds a higher likelihood of a claim being filed in the next renewal period. Data suggests your entire driving record could be factored into these predictive underwriting algorithms.
What Can I Do to Minimize The Impact of Auto Accidents on My Car Insurance Premiums?
If you're concerned about your auto insurance premiums, you can do a few things:
- Balance the cost of filing a claim against the value you'll get out of it.
- Always get a police report to protect yourself against false claims later on.
- File your claim with the other party's insurance if not at fault in participating states.
- Keep your insurance up-to-date and add any drivers who might use your car early.