How to Lower Car Insurance Costs After an Accident

No matter how long you've had your insurance policy, an accident could lead to an increase in premiums. How much depends on your individual policy, as well as the general practices of the insurance company you've chosen. But if you aren't happy with what you're paying, it can never hurt to shop around, especially if your premiums are already higher than some other insurers charge.

How to Lower Car Insurance Costs After an Accident
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Claiming Car Insurance After Accident

First, if you've been in an accident, it's important not to panic over insurance. There are several factors your insurer will consider when deciding whether to increase your premiums. If you've been with the provider for a while with no claims, you may be given a pass. If the accident wasn't your fault, some insurance companies won't penalize you at all.

Whether you were to blame for the accident or not, you should let your insurance company know. However, if the other driver is to blame, your claim will be filed through that person's insurance company. Make sure you file a police report and get insurance information from the other driver and, if possible, snap photos of the accident scene. Some insurance companies have a portal to make it easy for you to upload these photos and any other documentation that can help.

Which Auto Insurance Has Accident Forgiveness?

Several major insurers now have something called "accident forgiveness," which allows you to have an accident without seeing a rate increase. With Nationwide, you'll need to pay extra for accident forgiveness and the cost could offset any savings you'd see. Allstate's accident forgiveness program can be added at the time you're getting an insurance quote, so again, you may find the extra cost isn't worth what you'd save.

One of the biggest issues with these policies is that you're often required to go without a claim for multiple years before an accident will be forgiven, even if you're paying extra for it. In some areas, you won't even be eligible for it due to local laws. California, for instance, outlawed accident forgiveness in 1988 due to the fine print attached to them.

Do All Accidents Show Up on Your Driving Record?

Even if you file an insurance claim, your accident may not show up on your driving record. The police officer generally submits the accident report to the Department of Motor Vehicles. If emergency personnel arrive to administer medical aid, your accident will likely also be reported as a result of that. However, in some states, you're required by law to report the accident to the DMV, especially if damages exceed a certain amount.

Although it can be tempting to avoid contacting the police or notifying your insurance after an accident, there can be serious consequences to that. Not only is it likely a violation of the contract you signed with your insurance company, but the damage to your car could be more serious than you realize. Additionally, by failing to report the accident to your state when required, you could face legal penalties, including being punished for having left the scene of an accident.

How Long After a Car Accident Does It Affect Your Insurance?

You won't always see a rate increase after an accident, but if you do, it won't be permanent. Most accidents cycle off your record after three years, at which point you should enjoy the same low rates you would have had if the accident had never happened. But you don't have to wait three years to see improvement. Most insurers gradually reduce your rates over the course of three years, as long as you don't get into further accidents.

If you've gone more than three years since your last accident and your rates haven't improved, pick up the phone and call your insurance company to ask. It might also help to check prices with other reputable insurance companies. If you get a better rate, you may be able to call up your insurer and let them know you're planning to cancel for a better deal elsewhere. They could offer a more competitive rate if they know they're on the verge of losing your business.

How Much Does Your Insurance Go Up After an Accident?

There's no guaranteed amount your rates will go up following an accident, especially since incidents can vary in severity. After your first accident, State Farm charges an 8.5 percent surcharge. With Progressive Insurance, you'll pay a whopping 49 percent for two vehicles in your household after an accident.

Although at one time, the industry standard was an increase of 20 to 40 percent or more, that's no longer set in stone. Increases can vary by state, as well, with California residents seeing a 92 percent increase on average and Massachusetts seeing an average extra charge of 72 percent.