Car insurance policies are getting expensive, and considering the multiple factors that can affect your auto insurance rates, you need to know about all of them if you want to insure your car affordably.
Auto insurance policies such as liability insurance, collision damage waiver, etc are some of the most expensive and volatile insurance policies. What do we mean by “volatile”? Here, “Volatile” means that the rates of these policies are affected even by the slightest things.
It is a known fact that a car accident that is your fault will increase your auto insurance rates, but what about all the cases where the accident was not your fault? What if you were just driving the car, following the traffic rules and someone just slams their car into yours? Do insurance rates go up after a no-fault accident?
Accidents and Insurance Rates
Road accidents are the most impactful factors in increasing your car insurance rates. But just like auto insurance, road accidents are also very complicated. If you are at fault for any car accident, your insurance rates will increase. This includes rates of collision insurance, liability insurance, and even uninsured motorist coverage in some cases.
Once you get in an accident you become a high-risk individual. Car insurance companies look at you as more likely to get in another car accident and make an insurance claim. So to offset this risk, they adjust the price of the policy premium; your insurance rates go up.
The opposite is true for people who are low-risk individuals. Insurance companies offer people no-claims bonuses if they do not make any insurance claims during the policy period. Not just making an insurance claim, even if you get in a car accident and your insurance company gets to know it, your premium rates can increase.
Insurance Rates After No-Fault Accident
We know that car accidents increase insurance rates. But what if you are on the other side of the accident? What if you get in a car accident and the other driver is at fault? What happens to your car insurance rates?
Owing to the multiple factors that affect car insurance rates, your insurance rates can either stay the same, or increase but only a little. The chances of your car insurance rates increasing after a no-fault accident depends on:
- Your car insurance company
- The state you live in
- The type of accident
- The investigative process
- The type of policy claimed
Once you get in a car accident, your insurance company will investigate the accident in detail. This is to see how much of the fault was yours. A lot depends on the internal processing, but whatever the process, expect only a small increase in your insurance rates (liability insurance and collision insurance) if there will be any in the first place.
Claiming the other driver’s (at-fault driver) liability insurance will not increase your car insurance rates. This is because the accident was entirely the other driver’s fault and they are liable to pay for the accident. So do not worry about claiming someone else’s liability insurance.
But what if the other driver does not have a liability policy or has one but is not enough to pay for the entire expenses of the accident? In this case, you will have to claim your uninsured motorist coverage. Some states in the US have made it mandatory to have uninsured motorist coverage.
So if you claim your uninsured motorist coverage policy, it will have some impact on your insurance rates. The premium rates for Uninsured motorist coverage will likely increase, albeit only by a little. The premium rates for liability, collision, and comprehensive coverage will remain unaffected.
The State You Live in
Different states have different laws regarding car insurance policies. So the state you reside in makes a lot of difference when answering the question about price hikes after a car accident.
For example, if you live in Indiana, car insurance companies in Indiana have to follow the law that states if one party is 100% not liable for the accident, the victim is entitled to not experience any price hike in insurance rates.
But if you are liable for the accident by over 50%, then your insurance rates will increase. Not just that, if you have received a ticket recently, or you live in a high-risk locality, you might get a slight price hike in your insurance premium rates.
If the accident was caused due to mechanical failure, such as a tire bursting, your insurance rates might not increase. But as they say, “the devil is in the details”. The chances of you getting a price hike on insurance policies depends a lot on how your insurance company views the accident.
Consider Accident Forgiveness Add-on
People understand the impact of a car accident on your auto insurance rates. And so do auto insurance companies. One small accident can increase your car insurance rates for decades! And it does not matter which car insurance company you choose, the rates will be higher for all the coverage.
This is why there is an add-on that you can get called “Accident Forgiveness”. Using this add-on, you can prevent your insurance rates from going up even after you get in an accident and the accident is your fault.
Some insurance companies offer this accident forgiveness add-on for free if the policyholder has not made any insurance claims for five years (and stayed with the same auto insurance company). But this can vary from company to company.
If you feel that you are very likely to get in a car accident, or if you have a teenage driver in your house, getting an accident forgiveness add-on is worth the price. It will help you save a lot of money in the long run.