The Brown Firm

It's about as exciting as doing your tax returns.

It's boring, stressful, but completely necessary.

What am I talking about? Picking out your car insurance.

If you have a car and a drivers license, you absolutely must have car insurance.

Driving without insurance is irresponsible, and can affect your life and anyone you come into contact with on the road.

The best case scenario for you and everyone else on the road is that you'll have insurance but never have to use it.

However, when if the time comes when you need to use it, you can't be afraid to use it.

When we shop around for insurance, we usually go with the company that offers us the lowest rates.

There's no problem with that; you need to know what you're paying for.

When we get into accidents, one of our first thoughts, once the dust settles is, "how much will this raise my insurance?"

Sometimes the raise will be significant. Other times it won't raise it at all.

Let's take a more in-depth look at exactly how much a car accident could raise your insurance.

What's Considered An Accident

As a disclaimer before we get started, things will always vary from state to state and company to company.

This article will serve as a general guideline to what you can expect after an accident.

Always check with your insurance company and state laws after an accident.

Before we can know how an accident will affect our insurance, we need to know what the insurance companies consider an accident.

State Farm considers it an accident when a claim has been made totaling $750 or more under property damage liability coverage and collision coverage combined.

The accident also has to be at least 50% of the driver's fault.

GEICO handles accidents similarly, calling them "qualifying accidents." They also have a monetary threshold.

GEICO has certain risk groups where the threshold is lowered from $750 to $500.  These drivers typically don't maintain a good driving record.

GEICO also has the 50% at fault limit.

Allstate handles it depending on whether you are a new customer or a returning customer.

New customers get the stricter definition.

What's Not An Accident

Figuring out what isn't an accident is almost harder than figuring out what is.

One common thing found between most companies is the level of fault assigned to the driver.

As mentioned above, you are at fault if the accident is found to be at least 50% your fault.

So, if you're found less than 50% at fault, it's not considered an accident. That means, for most companies, the accident won't be charged against your rates.

Proving fault in an accident is difficult and can be complicated to prove.

That's an issue for another article.

There are also guidelines most companies share that ensure a driver will not be deemed at fault.

Some of them are:

  • The accident was caused by animals or falling objects.
  • The driver was hit from the rear and was not convicted of a moving violation in relation to the accident
  • The driver was lawfully parked
  • They were hit by a hit and run driver and report the accident within 24 hours

Time is also a factor. Generally, companies use the three-year mark prior to the policy start date.

That means if you were in an accident four years before your new policy, it wouldn't be used against you when they calculate your rates.

How Much Your Rates Increase

Again, several factors go into this.

So, as an example, we're using a 20-year-old man who drives a Toyota Corolla.

After an accident that caused both bodily and vehicular damage, his rates would increase by 1.33.

If no bodily injuries occurred, his insurance would only increase by 1.23.

So if his premium was $1,000 before the accident, it would rise to $1,333 after the accident with both physical and vehicular damage.

His premium would rise to $1,230 after the accident with only vehicular damage.

So while the 1.33x might not seem significant, an extra $333 a year can add up very fast.

There are variations between states and insurance companies as well.

In Massachusetts, rates increased by 1.48, while in Pennsylvania, they only increased by 1.16.

State Farm averaged an increase of 1.29, while GEICO averaged a hike of 2.18.

When it comes to accidents and insurance, your rates depend heavily on the state you live in and the company you do business with.

Other Factors To Consider

It can get even more complicated. If you are found over 50% at fault in an accident, there are still more factors to consider.

Some insurance companies have accident forgiveness, which waives at least one qualifying accident.

If you aren't lucky enough to have accident forgiveness, keep these things in mind:

  • Age. Surprisingly enough, younger drivers are less likely to see a dramatic increase in their rates after an accident. Typically, the younger you are, the more you pay in general, but this is one of the few exceptions. This might be because the insurance companies have already deemed younger drivers as risky drivers, and have already compensated for things like accidents in their rates.
  • Number of Violations. This one shouldn't be a surprise. The number of violations you receive and the frequency in which you receive them will impact how much your rates rise after an accident. If you have received a lot of violations of the last few years, expect a decent hike in your rates if you're proven to be at fault during an accident.

It's Complicated

Like most things in the world of insurance, it's not cut and dry. Your rates could go up or stay the same for a variety of reasons.

The state you live in, the company you're with, your age, and driving record are all influences when insurance companies calculate your rates.

Your rate won't be affected the same way your neighbors would, and your neighbor's rates won't be affected the same way some guy in Arizona's would.

It all depends.