Getting into a car accident can influence your car insurance premium rates. However, it’s not as straightforward as you may think. There are many ways around it, and by knowing the factors affecting insurance rates, you might just be able to save that extra buck. Learn the critical factors that affect car insurance premium rates, and equip yourself with these handy tips in case you ever get involved in a vehicular accident.
Factor 1: Who the “at-fault” driver is
As a general rule of thumb, insurance companies increase rates if a driver who registered a claim was the one at fault. However, the rate may be kept the same if the driver is not the one at fault.
By definition, if you are “at-fault” for an accident, you are the one who caused the accident in the first place. If the insurance company and/or police deem you 51 percent or more at-fault, then you are considered to have caused the accident. A ticket from a police officer is not required in order to be at-fault according to the insurance company. If you are in a single vehicle accident, it is more than likely than not that you are at-fault.
For example, if you hit ice, slide off the road, and hit a tree, you are considered to be at-fault because you did not have control of your vehicle at the time. If you hit a pothole, you are also considered at-fault, because this is a single vehicle accident that is avoidable. The only time you are not at fault is if another vehicle hits you while you are following all the rules of the road.
There are some exceptions to the rule and not being the “at fault driver” can still lead to increased auto rates. For instance, rates are usually increased because the driver of the car to be insured is statistically more likely to be involved in an accident in the future and pose more risk to his/her insurance company. In addition, if a driver lives in a non-fault state, the insurance companies pay for particular portion of the costs, and the rates may be increased regardless of who caused the accident.
Factor 2: How intense the damage is
Insurance companies also look and take note of the severity of the accident, and would adjust your premium rate accordingly. Damage due to an accident ranges from a simple fender bender to the car being totaled. Therefore, accidents with greater damage have higher possibilities of leading to increased premiums because the car insurance company would then be required to pay a larger compensation.
Factor 3: Driver’s value to the company
Your track history does count to insurance companies. The longer your history goes and the cleaner it is, the more likely you would not have to deal with increased car insurance premium rates. Drivers who have very long history of safe driving and have stayed with the insurance company for a long period of time often do not experience increased rates in their premiums as compared to those drivers with poor driving records.
Factor 4: Insurance company policy
The last thing you have to consider is that every company has its own unique policies that affect the customer’s insurance rates in case of theft, accident or any other type of claim. At the end of the day, an insurance company may increase customer’s premium for any claim regardless of the magnitude of the claim, even if the accident was not due to factors relating to the driver.
Conversely, there are other insurance companies that may not make any change on insurance rates if there were only minor damages, it was the first accident, the accident was not caused by the driver or the driver has a good driving record.
Furthermore, rate changes may be based on the benefit package included in your car insurance plan. A perfect example is when insurance includes roadside assistance. This add-on may be affordable and convenient upfront, but when you use it too many times, car insurance companies would see it as a risk factor on your part. This most likely would affect your premium rate on your car insurance. If your objective is to lessen your rates, you might want to consider going for an affordable towing company as needed and just pay for their services yourself.
After knowing these factors, you need to take note of these tips in case you do experience an accident:
Tell your insurer about the accident, as soon as possible.
If you caused a minor accident in which no one was hurt, or you weren’t at fault, you may be tempted to just not tell your insurance company about it. However, this could be a big mistake. If the other driver, for example, sues you weeks or months later, your failure to report the accident immediately might cause your insurer to refuse to honor the policy. As a result, you’d be stuck with all the legal bills and any potential judgments in the plaintiff’s favor. Those bills would most likely be far higher than any premium increase.
Alternatively, if your insurer does still honor the policy, you still have deprived them of valuable time — time in which they could have investigated the accident and prepared your defense. In other words, by withholding the information, you have decreased the odds of them winning the case for you. If they do end up payinfg a claim, they would then most likely increase your premium.
Ask if your policy includes an accident forgiveness clause
You’ve read earlier that insurance companies can have different insurance policies especially during an accident. This means that you should still ask if your company includes an accident forgiveness clause.
Statistics show most drivers get into one car accident every 17.9 years. Because some insurers have accepted that accidents are simply a part of life, they’re willing to ignore your first mishap and not raise your premium.
The details vary by company. Some may give you accident forgiveness immediately, while others would only do so after you’ve been an accident-free policyholder for as many as three to five years. They may also require no moving violations for three years.
Take advantage of other discounts
There’s still other ways to get discounts even after an accident. For example, drop collision and/or comprehensive coverage can be available if you have an older car. The primary purpose of collision coverage is to cover you for vehicle damage as a result of an accident. Collision would cover you for both accidents that are your fault or the fault of another driver.
As a rule, collision insurance pays for repairs to your car. Then again, in situations when the cost of the repair is higher than the book value of the vehicle, your car is considered “totaled,” and the insurance company pays you the book value of the car only. At that point, you have the option to either repair the vehicle for less money than originally planned, or use the money to replace the vehicle outright.
Also, if you drive less than 10,000 miles per year (the average number of miles insurance companies assume people drive), you could qualify for a discount. Lastly, your insurance provider may lower your rate if you’ve been a long-term customer.