Jenny sighed as she thought about the accident from last year. If only she had been paying closer attention instead of focusing on her phone. But it was too late for regrets now. Ever since that fender bender, her insurance rates have gone through the roof.
Dealing with a car crash can be stressful, but the effects continue past the initial impact. We examine the causes of these insurance rate hikes and strategies to reduce the financial impact of an accident.
The Major Impact of At-Fault Accidents
Average Rate Increases Across the Nation
Our analysis found that nationwide, drivers pay an average of $1,016 more per year for full coverage auto insurance after an at-fault accident.
And she’s definitely not alone. In some states, the increase was even steeper. Jenny’s friend Michael, who lives in Michigan, saw his rates jump by over $1,500 each year. Can you imagine trying to come up with an extra grand each year? It wasn’t easy for either of them.
The premium hikes are even more severe in some states. In 10 states across the nation, average rates spiked by 50% or more following an at-fault crash. And in four states – Michigan, Florida, New Jersey and Texas – premiums surged by over $1,500 per year on average.
Both Jenny and Michael wanted to know: why such a huge increase just for one little accident? The insurance agents explained that from the company’s perspective, anyone who has been in a crash before is more likely to do it again. Even a small fender bender gets labeled as careless in the insurers’ eyes.
Why Such a Big Spike?
The reason for these major rate increases is that insurers view drivers who cause accidents as higher risks. Even if it was a relatively minor fender-bender, having an at-fault accident on your record makes you seem more accident-prone in the eyes of insurance companies.
The agents warned that the higher rates would stay in effect for 3 to 5 years. Jenny and Michael would just have to grin and bear the extra costs, unless they wanted to try switching providers and see if anyone else would give them a better deal. Either way, one little accident from the past was costing them dearly in the present.
As a result, the premium hike from an at-fault accident typically lasts for 3 to 5 years before starting to subside. During that time period, you’ll be paying those elevated rates unless you shop around for a better deal.
Comparison of Coverage Types
The impact of an at-fault accident is greater for drivers carrying full coverage auto insurance compared to just minimum liability insurance required by states. Here’s how the average nationwide rate increases break down:
- Full coverage average increase: $1,016 per year
- Minimum coverage average increase: $359 per year
This table shows the average rates before and after an at-fault accident for both coverage types:
| Type of Policy | Average Rate Before Accident | Average Rate After Accident |
|---|---|---|
| Full Coverage | $2,148 | $3,164 |
| Minimum Coverage | $685 | $1,044 |
How the Major Insurers Respond to Accidents
State Farm Has Smallest Rate Hikes
Jenny decided to do some research to see if she could find a better deal after her car insurance rates skyrocketed. She looked up the largest insurance companies and how much they typically raise rates after a crash.
State Farm, the biggest provider nationwide, actually had the most reasonable prices to start with. They also increased rates the least percentage-wise for drivers who had recently been in an accident like herself.
While any increase still hurt, it seemed State Farm punishes less harshly than other insurers. Maybe switching could save her a little money each month. It was worth a call to get quotes and see if they might offer a small light at the end of the long, dark tunnel of her higher premiums.
With 44 states and DC to analyze, the data was comprehensive. Jenny cross-checked the statistics, hoping one company could treat her slightly more fair than her current one piling on costs. Even a hundred dollars less per six months would help. She’d just have to explain her situation to State Farm and see if they were willing to give her a fresh start.
| Company | Average Rate Before Accident | Average Rate After Accident |
|---|---|---|
| 1. State Farm | $1,431 | $1,833 |
| 2. Allstate | $3,110 | $4,405 |
| 3. Progressive | $2,075 | $3,029 |
| 4. Geico | $2,009 | $3,216 |
| USAA* | $1,120 | $1,590 |
*USAA is only available to military members, veterans and their families.
Company Pricing Can Vary Drastically
For drivers who qualify, USAA frequently had some of the lowest rates found, both before and after an accident. But in some cases, USAA was no longer the cheapest option once a driver caused a crash.
The drastic difference in how insurers price policies after an at-fault accident is why it’s so crucial to shop around. We found some companies actually doubled their rates after a crash, while others barely increased them at all.
Getting Cheaper Rates Post-Accident
How to Potentially Save Thousands
Since insurers vary so widely in how they raise rates after an accident, shopping around can potentially save you thousands per year. Our analysis shows no single insurer is cheapest for everyone after a crash.
In over a third of the states analyzed, drivers insured with the cheapest company before an accident would need to switch insurers after the crash to continue getting the lowest possible rates.
Cheap Insurer Options by State
While big-name insurers dominate the overall market, smaller companies often had the best rates after an at-fault accident in many states:
- Across all 50 states and D.C., 26 different insurers tied for the cheapest option after an accident
- Smaller insurers had the lowest post-accident rates in 34 states and D.C.
- A state’s Farm Bureau insurance showed cheapest post-accident rates in 5 states
This table shows the cheapest insurers for full coverage after an at-fault accident in each state:
| State | Cheapest Company | Avg. Annual Rate After Accident |
|---|---|---|
| Alabama | Auto-Owners | $1,950 |
| Alaska | Umialik | $1,369 |
| Arizona | Noblr | $1,063 |
Getting Cheaper Rates Post-Accident
How to Potentially Save Thousands
Drivers often assume that being insured with the cheapest option before an accident means they’ll continue to get the best rates after one. However, our analysis found this is frequently not the case. In over a third of the states, some drivers who were with the cheapest insurer available would need to switch companies to keep getting the lowest possible rates after an at-fault crash.
The drastic differences in how insurers price policies after an accident create huge opportunities for savings by simply shopping around. It’s insightful to learn that no one insurance company provided the most affordable rates across every location after an accident. With upwards of 26 different providers identified as the cheapest choice in at least one of the 51 regions analyzed, that implies real variability depending on your situation.
This diversity in pricing highlights how important it is for individuals to consider switching insurers. By getting customized quotes from multiple options near you, meaningful savings can potentially be achieved long-term. We’re talking about reductions that could amount to thousands annually.
Facing increased premiums post-accident makes seeking out the most cost-effective alternative even more impactful. This research emphasizes that the cheapest solution is unlikely to be uniform nationwide. Dedicated comparisons optimize the chance to minimize ongoing expenses through selecting an appropriately priced plan.
Cheap Insurer Options by State
While the largest insurance companies like State Farm, Geico, and Progressive dominate the overall market, our analysis found that smaller regional insurers frequently had the lowest rates after an at-fault accident in many states.
- Smaller companies returned the cheapest rates after an accident in 34 states and Washington D.C.
- In 5 states, the lowest post-accident rates came from that state’s Farm Bureau insurance provider.
- Some of these smaller insurers offering cheap rates only operate in a few states.
The table below shows the insurance company with the cheapest average annual full coverage rates after an at-fault accident in each state:
| State | Cheapest Company | Avg. Annual Rate After Accident |
|---|---|---|
| Alabama | Auto-Owners | $1,950 |
| Alaska | Umialik | $1,369 |
| Arizona | Noblr | $1,063 |
| Arkansas | State Farm | $1,386 |
| California | CIG | $1,623 |
| Colorado | American National | $1,095 |
| Connecticut | State Farm | $1,741 |
| Delaware | Travelers | $1,952 |
| Florida | State Farm | $2,194 |
| Georgia | Auto-Owners | $1,562 |
Other Ways to Lower Rates
While shopping around is a smart way to lower costs after an accident, there are other options worth considering too.
- Raising your deductible can chip away at premiums, even if it means paying more out of pocket for claims.
- Insurers offer all sorts of discounts for good behavior – anything from high school grades to driving courses can shave off a bit more.
- With diligent work to boost your credit over time, insurers may reward you by charging less in many places.
Small tweaks like these, combined with switching providers, can help offset rate hikes from even minor mishaps on one’s record. But comparing multiple companies’ quotes is still likely the most impactful path to big savings long-term.
What About Not-At-Fault Accidents?
Some Insurers Still Raise Rates
Though at-fault claims guarantee higher costs, studies show some insurers will charge more even for crashes you didn’t cause. A recent analysis found 10% or greater increases in over 10% of such cases.
The effect can be amplified in “no-fault” states, where insurers pay out claims for their own clients no matter who’s at blame. With each accident creating potential costs there, renewals sometimes bring unwelcome premium adjustments.
While insurers argue any past incident raises future risk levels, many competitors opt not to penalize policyholders for mishaps beyond their control.
State Laws Limiting Rate Increases
Some places implement rules barring rate increases when accidents were clearly not the client’s fault, defending customers from arbitrary financial punishment through no fault of their own. A few examples:
- California and Oklahoma completely ban rate increases for not-at-fault accidents.
- In Massachusetts, insurers cannot raise rates if the driver was 50% or less at fault.
- Maryland only allows increases for drivers 51% or more at-fault.
Certain insurance companies also have their own guidelines for forgiving not-at-fault accidents and allowing rates to persist at their current level.
USAA prides itself on fairness, assuring military families their costs won’t rise due to crashes out of their hands. On its website, the provider states premiums will remain untouched for accidents carrying no culpability.
When High-Risk Insurance Is Needed
Options for Multiple Accidents/Violations
For those burdened by multiple past mistakes or serious offenses, getting reasonably priced regular insurance poses an immense challenge. Understandably, major carriers deny coverage or quote astronomical rates to higher hazard clients.
In these difficult spots, specialized high-risk insurers step in. They cater compassionately to people with tainted records by providing alternative plans accounting for elevated claim likelihoods. Where standard options reject, these tailor coverage addressing applicants’ real needs.
While not ideal, such customized policies help ensure necessary protection stands behind drivers striving to learn from past errors. Second chances shouldn’t mean losing access to essential protection altogether – these companies recognize that with care and time, even high consequences can transform into fresh opportunities.
If you still cannot find an insurer willing to sell you a policy in the regular insurance market, there is a solution as a last resort – your state’s assigned risk pool. Each U.S. state runs this residual market program, which requires insurance companies to provide policies to a portion of high-risk drivers in proportion to their market share.
Policies obtained through your state’s assigned risk pool tend to be extremely bare-bones and expensive. But it allows even drivers with the worst possible records to maintain at least minimum liability coverage and remain legal on the roads.
The Accident Forgiveness Solution
To avoid the huge spike in rates after that first at-fault accident, many insurance companies now offer an “accident forgiveness” feature that can be added to your policy. As the name implies, accident forgiveness ensures your first chargeable accident doesn’t result in a premium increase.
Some key things to know about accident forgiveness coverage:
- It may comes at an extra cost, or it could be complimentary after being claim/accident-free for several years (often around 5 years).
- It only applies to your first at-fault accident while carrying that coverage.
- It resets itself after a set number of years without another chargeable accident (again, typically around 5 years).
- Coverage levels and qualification rules can vary by insurer.
Purchasing accident forgiveness coverage is well worth considering if you have an absolutely clean driving record and want that first layer of protection. Many major insurers offer this feature, including Allstate, Nationwide, Progressive and USAA.
Just keep in mind that accident forgiveness only delays the inevitable rate hike if you do end up causing a second at-fault accident down the road. Your premiums will assuredly increase at that point as you’ve now shown a pattern of being an accident-prone driver.
FAQs on Accidents and Insurance
Here are answers to some frequently asked questions about how accidents impact auto insurance rates and claims:
Will a hit-and-run claim raise my insurance rates?
Unfortunately, even when faultless, turning to your insurer means higher future costs likely. Carriers perceive any claims experience as increasing risk levels.
How long do accidents impact insurance rates?
Estimates suggest self-inflicted mishaps weigh 3-5 years from occurrence before easing, though sizeable collisions could extend that window further.
Can I choose my repair shop for an insurance claim?
Rest assured you retain autonomy selecting licensed repair centers, avoiding ties coercing choices. While insurers recommend options, the decision rightfully lies with clients to freely pick trusted shops meeting needs without pressure.
Do rates go up for not-at-fault accidents?
It depends on your insurer and which state you live in. Some companies and state laws prohibit rate increases for not-at-fault accidents, while others still raise rates since having any accident can indicate higher risk.
What is accident forgiveness coverage?
This optional coverage prevents your rates from increasing after your first at-fault accident. It may be free after several years accident-free or available for an extra cost.
Can I get high-risk insurance after multiple accidents?
Yes, but it will be very expensive. High-risk insurers specialize in covering drivers with multiple violations. If they deny you, you can get a policy through your state’s assigned risk pool as a last resort.
No matter what your driving history looks like, regularly shopping around for new quotes from multiple insurers is the best way to keep your rates as low as possible after an accident.
