Insurance premiums are not arbitrary, and insurance providers spend a lot of time determining what they think is the fairest rate for providers and drivers alike. While many drivers renewing their policy wish their rates would fall, the truth is that every incident, regardless of fault, contributes to a profile that predicts future claims, directly influencing the cost of your insurance. It is possible to lower your premiums after being involved in an accident, but not without taking other steps to find a better policy. This article will discuss how minor or major accidents may affect your rate.
Role of Claims History in Premiums
Your claims history is a significant indicator of risk for insurance providers. Both at-fault and not-at-fault claims are considered when calculating future premiums. This is because historical data suggests that drivers who have made claims in the past are more likely to make claims in the future. As such, your premiums could rise with each claim filed, even if you may disagree that an unlucky streak of accidents caused by other drivers reflects on your driving performance as well.
Even though every accident can potentially increase your risk level in the eyes of insurance providers, accidents are not all treated the same. Providers still understand the difference between rear-ending someone at a red light and being on the receiving end of that same accident. At the end of the day, it comes down to money. One accident may not result in a massive hike, but the more often you make an insurance claim, the higher providers have to raise your premiums in response.
Minor vs. Major Accidents
Minor Accidents – The Fender Bender
Imagine a typical minor accident: a fender bender in a shopping mall parking lot. Perhaps you misjudge the distance and tap the car behind you while reversing. The damage is minimal, maybe a scratched bumper. In a situation like this, the impact on your insurance rates might be negligible, especially if it’s your first claim. Insurers often overlook minor incidents if they don’t indicate a pattern of risky driving behavior. Some policies even include accident forgiveness that prevents rate increases from a first minor accident, provided your driving record is otherwise clean.
To minimize the impact of minor accidents on your insurance premiums:
- Opt for accident forgiveness features if your insurer offers them.
- Attend defensive driving courses to improve your skills and potentially qualify for insurance discounts.
- Maintain a good driving record to leverage in negotiations for lower premiums after an incident.
Major Accidents – Total Vehicle Loss
Consider a more severe scenario: a major collision that results in the total loss of your vehicle and significant injuries. Accidents like these significantly increase your risk profile, subsequently affecting your policy rates. In extreme cases, your insurance provider might even choose not to renew your policy, forcing you to seek coverage elsewhere, often at a higher cost.
If you find yourself facing higher premiums after a significant accident, here are some strategies to manage the financial impact:
- Shop around for new insurance quotes to find better rates. Different insurers have varying methods of assessing risk, and you might find a more favorable rate elsewhere.
- Determine if increasing your deductible to lower monthly rates is financially viable, given your circumstances.
- Work with an agent to find insurance bundling opportunities that will reduce your premiums across the board.
Discovering that your monthly premium has increased is never fun, but you can always work with an insurance agent to find better opportunities, especially if you haven’t explored the insurance market in recent years. To find better policies and lower your rates after an accident, contact Anderson & Associates today to learn how we can help.
