The first thing to do after an accident is to be sure that everyone involved is alright. Later on, a top concern is how much your insurance rates will increase. The general answer depends on several factors. According to the Insurance Institute for Highway Safety, typical factors to determine insurance rates may include: who is at fault, the location of the accident, and the age of the driver. They also take into account the driver’s previous driving record and any prior insurance claims.
Surcharge Schedule
Every auto insurance company has different procedures regarding accidents. Some will be lenient and forgive a first-time accident, while others have a blanket policy for accidents, even if it is the first offense.
All insurance companies, regardless of established policies regarding accidents, use a surcharge schedule to determine how a policyholder's premium will be impacted. The surcharge schedule takes several factors into consideration including previous accident and points on your driver’s license. Most states require insurance companies to present their surcharge schedule to a policyholder when they purchase a new policy. A general rule of thumb: the cheaper the insurance premium, the higher the markup following an accident.
Getting Down to Business
Most insurance companies follow standards established by the Insurance Services Office (ISO). While some insurance companies give first-time accident policyholders a break and only increase their premium ten percent, the ISO standard is to increase the premium by 20 to 40 percent after an initial accident. Do not expect to get a break the second time though. Most insurance companies will jack up rates substantially if a policyholder has another moving violation or accident following their initial accident. Even companies offering “accident forgiveness” will seriously increase insurance rates for a second accident.
Deciding to File a Claim
This is the “should I or shouldn't I” moment. There is no law requiring that a driver file an insurance claim for every accident. The concept of car insurance is to pay for damages from an accident to the insured's vehicle and other vehicles, people and property that were involved. Without insurance, these costs would likely be astronomical. If it is a serious accident involving a lot of damage, it is best to file a claim. If the amount of damage is just above the deductible or minimal, it may be best not to file a claim and pay any expenses out-of-pocket. In the end, it could save policyholder money.
Understanding Comprehensive Claims
Comprehensive claims are claims filed due to storm damage, theft and other accidents not directly involving the fault of any driver. Some states have laws regarding how much your insurance rates can be increased because of comprehensive claims. A policyholder may have a premium increase if it is determined that the damage could have been prevented within reason. For example, do not expect a break if you leave your car running with the keys in the ignition, and it is stolen.
Keeping It in Perspective
Being prepared for an accident starts with the type of insurance policy the insured selects in the first place. If you have to pay more than 20 percent for a first time accident, it is best find another policy. If you do end up having an accident, relax and remember that you have options. Decide if filing a claim makes sense in your situation, and remember that your rates can go back down over time.
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