How Much Does Insurance Increase After an Accident?

After an accident, the cost of your car insurance can significantly rise, often adding hundreds of dollars to your annual premium. The amount of this increase depends on several factors, including the severity of the accident, your insurance provider, your driving history, and the state you live in.

Average Increase in Insurance Premiums

According to a recent analysis, the average national increase in car insurance premiums after an at-fault accident is approximately 48%, which translates to an additional $848 annually for full coverage. This increase can vary widely; in some cases, rates can go up by as much as 71% depending on your insurance provider. The increase typically lasts for three to five years, though this period can be shorter or longer depending on your state’s regulations and your insurance company’s policies.

For example, if your annual premium was $1,766 before the accident, it could rise to $2,614 afterward. If you carry only minimum coverage, the increase is generally lower, but it can still be significant.

Factors Influencing the Increase

1. Severity of the Accident: The more severe the accident, particularly if there were significant damages or injuries, the higher your premium is likely to increase.
2. State Regulations: Some states, like California, have specific regulations that limit how long an accident can affect your insurance premiums. In contrast, in no-fault states, your rates might increase even if you weren’t at fault, because both parties typically file claims with their own insurance companies.
3. Insurance Company Policies: Different insurers have varying policies when it comes to premium increases after an accident. For instance, State Farm tends to have a lower percentage increase compared to other companies, while providers like Allstate may raise rates more steeply.
4. Your Driving Record: A clean driving record before the accident can mitigate the increase, whereas a history of traffic violations can exacerbate it. Some insurers offer accident forgiveness, which can prevent your premium from rising after your first accident, though this often requires paying extra for the feature and maintaining a clean record for several years prior.

How to Mitigate the Increase

1. Accident Forgiveness: Some insurance companies offer accident forgiveness as an add-on or as a benefit for loyal customers. This feature can prevent your insurance rate from increasing after your first at-fault accident. However, it’s not available in every state, and you can’t add it after an accident has occurred.
2. Shopping Around: After an accident, it’s a good idea to compare rates from different insurers. Some companies may offer more competitive rates for drivers with recent accidents. For instance, companies like Travelers or USAA may have lower rates for at-fault drivers compared to others.
3. Improving Credit Score: If your credit score has room for improvement, working on it can help lower your insurance costs, as drivers with poor credit can sometimes face higher insurance rates.
4. Taking a Defensive Driving Course: Some insurers offer discounts if you complete a defensive driving course. These discounts can help offset the increased costs after an accident.
5. Maintaining Continuous Coverage: Avoid letting your insurance lapse, as gaps in coverage can label you as high-risk, leading to even higher rates.

How Long Will the Increase Last?

Typically, an at-fault accident will affect your insurance premiums for three to five years. During this period, the impact on your rate may diminish annually if you maintain a clean driving record. However, in states like Massachusetts, an accident can affect your premium for up to six years. After the designated period, the accident should no longer impact your rate, assuming no further incidents occur.

Final Thought

Experiencing a car accident can be stressful, and the subsequent increase in insurance premiums adds another layer of concern. On average, you can expect your premiums to increase by around 48%, but this can vary significantly based on your specific circumstances. Understanding the factors that influence this increase and taking proactive steps—such as shopping around for better rates or enrolling in accident forgiveness programs—can help you manage the financial impact more effectively.

For a more detailed breakdown of how your specific situation might be impacted, it’s advisable to contact your insurance provider or use online comparison tools to explore your options.

This information was synthesized from detailed analysis and insights provided by NerdWallet, a reliable source for financial and insurance advice.