Holy Skidmarks, Batman!

Car Insurance Increases After One Accident Can Be Shocking.

You’ve had a perfect driving record for 15 years. Then you blink at the wrong moment and cause an accident. You’re responsible for the damages on claims being filed to your insurance company. The chances that your car insurance rates will skyrocket come renewal time aren’t certain, but they’re better than even. Here’s how it works:

The standard increase put forward by the Insurance Services Office (ISO) for a policyholder’s first at-fault accident is 20% to 40% of the insurer’s base rate (20% for a multi-car policy and 40% for a single-car policy). Understand that the base rate is not the same as your premium rate. It’s the average amount of claims paid plus the insurance company’s claims-processing fee. So if you have a good driving record prior to this accident, odds are your carrier’s base rate is higher than your pre-accident premium. You may want to call your insurer to find out.

Now let’s say you insure two cars at a premium of $300 each and a base rate of $400. After this first accident, you may get an increase of $80 (20% of the base rate) on both vehicles. That $160 total would be an increase of roughly 27% on your car insurance. Ouch.

There is some good news: ISO standards hold that for property damage-only accidents where the damage is less than $1,000, there is no increase. It also holds that there should be no increase if the accident is caused by someone who has been driving less than 2 years. This is because that new driver is already penalized with a higher premium for being inexperienced. In addition, individual states weigh in with their own surcharge exceptions and limitations

Other oddities to take into consideration: Some insurance companies will base the increase on your pre-accident premium rate rather than the base rate. Others consider the claims statistics of drivers similar to you in terms of age, zip code and driving record before determining the percentage of increase to charge you. And because none of us ever drive in a vacuum, other factors could be at play. Say you had submitted the accident claim and had a birthday before the next renewal period. If that birthday bumps you up into a higher risk category just as the claim is going through, you might see your premium jump significantly more than the 27% cited above. Or say you made the claim and bought a more expensive vehicle before renewal time, you might see your premium increase as much as 100%. On the other hand, if after totaling that sports car you bought a sedan, the savings you reap from the change in vehicle-type might help offset the increase caused by the accident. If your head isn’t spinning yet, you must have checked out a few paragraphs ago.

Finally, some insurance companies “forgive” customers with good driving records the first time they cause an accident. “Forgiveness” is not universally practiced in the industry, and car insurance companies that do forgive good drivers often require those drivers to meet specific criteria before they qualify. If you’re a good driver, this is something ChoiceAutoInsurance.com would definitely recommend you look into as you shop for car insurance. Call the carriers and ask if they offer first-time accident forgiveness. While we hope you never need accident forgiveness, simply asking about it could save you an additional 20% on your car insurance over time.