Even the most careful, observant driver can make a mistake. Being at-fault in a car accident is something that many of us will experience during our driving lifetimes. It can take only one second, one momentary distraction, to cause a collision. The most spotless of driving records can encounter a blemish now and then.
Let's imagine you are a cautious motorist 99% of the time, but happen to get into a wreck. You file a claim, pay your deductible, and receive your settlement. Your vehicle is fixed, but one upsetting question remains – how will this affect your car insurance premium?
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It’s Different With Every Auto Insurance Company
Fact is, each insurance company charges different rates. That is why it’s a great idea to receive multiple online insurance quotes. Also each insurance company calculates the affect of an accident on your insurance premium differently. For example, if you are insured with All-State for one year, your premium may increase by 20% after an at-fault accident. If you are insured with State Farm for one year, your rate might go up by 25%. With Geico, you could see a 40% hike. There is no industry wide standard increase rate. However, as a general rule of the thumb, you will see an increase between 20% - 40% after your first at-fault accident.
It Depends On The Insurance Company’s Surcharge Schedule
All auto insurance companies have a surcharge schedule. This is a schedule by which you will see increase in your base premium by a certain percentage. For example, if your annual premium is $500, a 20% surcharge means that you will see your premium increase by $100 a year. Surcharges are normally in effect for at least three years. This means you will pay an additional $300 in insurance due to the accident. This is in addition to whatever you paid for your deductible.
The surcharge schedule increase is dependent on a number of factors. Much like how auto insurance companies derive your base premium rate, the surcharge schedule is influenced by where you live, what car your drive, etc. Subsequent accidents will mean more costly surcharge increases. Based on the above example, if you get into a second at-fault fender bender, your rate could shoot up 50%. That is an additional $250 per year, $750 over three years.
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Accident Forgiveness
A new incentive that many auto insurance companies now offer is “accident forgiveness.” This benefit allows you to be “forgiven” for one at-fault accident. Your base rate will not see a surcharge increase. However, you may lose other discounts, such as the “Good Driver” discount.
You have to meet certain prerequisites in order to qualify for this benefit. Often you must be with the same insurer for three years (sometimes five), and be accident-free for between three and five years. In some cases, there is an additional fee charged for this benefit. Though, this extra fee will pale in comparison to the rate increase you will see after only one accident.
Note your accident may be forgiven, but it is not forgotten. You will see a premium increase after your second accident. It is not as if the first accident never occurred; you will not be “forgiven” next time.
Looking at these numbers really demonstrates the expense of getting into a car wreck and why we should do everything possible to avoid accidents. Lets hope this never happens to you, but if it does, know your options. If you get stuck with a high rate, remember you can always comparison shop using the online quote form here at Cheap Quotes Car Insurance.