Millions of motor vehicle crashes occur each year in the United States. According to the National Highway Traffic Safety Administration (NHTSA), there were over 7 million police-reported motor vehicle accidents in 2016. While the majority of motor vehicle accidents are not fatal or do not result in injury, they can affect those involved in a number of ways.
In addition to any psychological or physical effects a crash may have on those involved, drivers sometimes face serious financial consequences. Those who have been injured in an accident may receive medical bills as well as potential legal fees associated with a car accident. Your insurance rates may increase, too.
So, how are insurance rates affected by a car accident, regardless of fault or injury?
What is the Purpose of Auto Insurance?
When a motor vehicle accident occurs, auto insurance provides financial protection against physical damage or bodily injury. Some types of auto insurance may offer other protections as well, including vehicle theft, non-accident related damage, and other accidents. Regulations may vary, but each state has its own mandatory minimum coverage requirements.
Auto owners are required to have insurance coverage for bodily injury and property damage, but insurance can cover additional items as well, including medical bills, third parties, vehicle rental costs and towing costs.
How Are Auto Insurance Rates Determined?
A driver’s insurance rate, also known as the insurance premium, is often set by a number of factors, including:
- Type of vehicle
- Coverage selected
- Driver profile (age, sex, driving history)
- How the vehicle will be used
Other factors may be considered as well, such as driver location, marital status, profession and credit rating. In the United States, male drivers under the age of 25 typically have higher-than-normal insurance premiums.
How Can a Car Accident Affect Insurance Rates?
When you are involved in a motor vehicle accident, you might see an increase in your auto insurance rates — but not necessarily. If you are found to be at fault for the accident, if the cost of damages is significant, or if you’ve filed more than one claim within a certain period of time, your insurance rates may go up. Also, if you get a ticket for any reason, your rates may go up as well, but again, there are a lot of factors your insurance company will consider before raising your premium.
Some states have what are called “no-fault” auto insurance laws. In those states, your insurance company must pay for any injuries to you or your passengers regardless of who was at fault. In those instances, the insured driver might see their insurance rates increase after an accident.
How Can I Keep My Insurance Rates from Increasing?
What’s the most obvious way to keep your auto insurance rates from increasing? Obey traffic laws, be cautious and don’t get into an accident. While easier said than done, having a clean record free of accidents and traffic violations will help keep your insurance rates down.
Additionally, you could also see if your insurance company offers an “accident forgiveness” program or something similar. Some insurance companies reward their customers for being accident-free for a certain amount of time as well.
If your insurance rates go up for seemingly no reason, you might want to check with your insurance company. In some cases, you may be able to adjust your coverage to help bring your rates back down. You might even want to shop around for a better deal elsewhere.