Why Car Insurance Increases After Accidents

By Author: Marcus Stalder
Total Articles: 491
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Car accidents are in the news all day, every day, and they are certainly on the rise. What many people who have never been in a collision realize when they pass one on the road every day is that, that accident is going to cost somebody thousands of dollars. In most cases, it is the insurance companies that are eating the bulk of those costs, but one of the reasons insurance is getting so expensive is due to the fact that many people involved in those accidents don't even have insurance. This costs the economy millions every year. Many people do not understand just how expensive car collisions are, and they are in more ways than one. Here we discuss the why car accidents, either yours or someone else's, are leading to exorbitant hikes in your car insurance policy.

Many Americans make the mistake of thinking that if they are involved in an accident for which they are not at fault, they won't see a raise in their insurance. This is simply not the case, and insurance companies will always find ways to pass the cost of collision onto their consumers. In most standard car insurance policies, the types of coverage include personal ...
... injury protection, liability insurance, comprehensive insurance, and collision insurance. But not every driver holds all types of insurance, and this is one thing that is making accidents so costly in the insurance business today.

If you are found at fault in an accident, your liability coverage will cover all other parties involved in the accident. If you have collision insurance, you will also be covered. If you don't however, you will have to eat those costs yourself. If you were not found at fault, the other party's liability insurance will cover your costs. But what if they don't have insurance, or don't have enough to cover your costs? Then you will be covered by your insurance if you have collision and uninsured/underinsured motorist protection. Even in the best case scenario however when all parties have all necessary insurance, chances are, both parties will see a raise in their insurance.

The most common questions on that are why, and how much? Any time a claim is made with your insurance company, your level of perceived risk raises with them, even if the accident wasn't your fault. So you will see a raise in your insurance that reflects the nature of the accident and any of the costs that the insurance company incurred as a result.

But even if you are found at fault in an accident, this doesn't mean the insurance company is allowed to empty your wallet just for the privilege of staying on as a customer. The Insurance Services Office has a criteria of how much an insurance company is allowed to hike your premiums after a collision. Most rate hikes generally fall between 20%-40%, with the 20% generally applying to multi-car policies, and 40% for single vehicle policies. Your driving record, gender, and age will also play a role in determining how high your insurance will go.

It is important to note that when car insurance quotes raise after an accident, it is not an effort on the insurance company to recoup their money. Rather these quote hikes are a reflection of the fact that your risk of being involved in another accident has increased. In order to lower those car insurance quotes, even after an accident, it is important to stay on top of your driving record and insurance payments to re-establish good history with your insurance company. After time with no more collisions, your car insurance quotes will decrease.