How much will my car insurance rates rise after an accident?

The answer to this question depends upon many factors. These factors being your location, age, driving record before the accident and "loss experience" ( number of claims) and if the accident was deemed to be your fault all affect how much your car insurance premium may rise following one accident. Each company is different when it comes to how much they count your first accident against you.

Surcharge Schedule

All car insurance companies use what's called a "surcharge schedule". This surcharge schedule details exactly how much your premium will be affected by various factors such as points on your license, accidents, etc. Many states mandate that car insurance companies give you their surcharge schedule when you buy a policy. Surcharges vary by state and insurance company. Some car insurance companies focus more on moving violations and points while others may only focus on chargeable accidents. Typically, the cheaper the insurance premium and the better the deal; the higher the markup will be with your first accident. Surcharge schedules are filed with your state's department of insurance.

How much will my premium rise on average after an accident?

A general rule of thumb for car insurance companies is to follow the standard set by the Insurance Services Office (ISO) of increasing your premium by 20-40% following your first accident. Some companies will give you a break on your first accident and increase your premium 10% (State Farm per their 2008 Surcharge Schedule). However, typically these companies will really up your rates drastically if you have another accident or moving violation following your first accident. State Farm will up your rates another 45% following a second accident. So, if you have a policy with one of these "accident forgiveness" companies, then you better not have another one!

Companies such as Progressive raise your rate approximately 30% after your first accident and an additional 56% after your second per their 2002 surcharge schedule. AAA will raise your rate 30% after your first accident and 150% after your second!

As you can see, it really pays to review surcharge schedules for various companies before you buy a policy from them. When shopping for car insurance, request to review the company's surcharge schedule prior to purchasing a policy from them. If you can't get this information from the insurance company (many companies consider this information proprietary), then contact your state's department of insurance and file a complaint if you think the premium is too high. They will be able to determine if your rate is within the acceptable norms for your risk profile. If the rate is higher than the surcharge ratios filed by your insurance company with your state, then you may be able to use this information to get your rate lowered.

Should I file a claim?

After an accident , it's important to evaluate whether or not it is worth it to submit a claim. The idea behind car insurance is to cover you for damages you cause other vehicles, people and property as well as major damage to your own car. Our philosophy with car insurance is to keep your premium low , increase your deductible and only make a claim for your own damage if it's significant. If the amount of damage is just above your deductible, then it may be better to NOT file a claim and just pay it out of pocket. Your savings in the long run will be significant. Especially if you have a policy with a company that has a large first accident surcharge factor.

Low premium , high deductible (if you can afford it) and only file a claim for significant damage over your deductible is the way to go.

What about Comprehensive Claims? Do they cause my insurance premium to go up?

Typically, most comprehensive claims don't result in an increase in your premium. Comprehensive claims are those resulting in damage due to theft, storm damage, etc. The amount an insurance company can raise your rates , if at all, varies depending upon the law in your state. Your rates may be allowed to be increased following a comprehensive claim if it is deemed that you could have prevented the loss or if the loss was caused by obvious recklessness or disregard on your part. An example of this may be if you leave your car running, leave for a few minutes and your car is stolen. This is obvious neglect and would most likely result in an increase in your insurance rates.

Where can I find the best deal after an accident?

If your rates have gone up after an accident more than 20%, then you should definitely look around to see if you can find another insurance company that has a lower first accident surcharge factor. If you are shopping for car insurance and want to compare rates, then we suggest that you compare policies and rates from several insurers. We recommend Insureme who allows you to compare several rates from dozens of major, highly rated insurers such as Met Life, Allstate, AIG, and more. They are also unique in that they include independent insurance agent quotes as well. Be sure to get a copy of their surcharge schedule to review before buying!

Example of a car insurance company surcharge schedule and how to read it

An example of a surcharge schedule is this one (this is a pdf file) from Allstate to it's Minnesota policy holders effective 8/2/2010. If you go to page 4, you'll see the table that lists how Allstate will increase your premium following an accident as a Minnesota based policy holder. Let's say you've just had your first accident as a Minnesota policy holder. You look at the first table on page 4 on the left hand side and choose 0-1 years since first accident and, looking at the top of the chart, go to "None" for second accident. This results in a "3" under accident points. You then refer to the second table on the page and look at the "3" row under "accident points". You'll see factors of 1.21, 1.20 and 1.23 under each heading. Each of the headings refer to how much your rate will rise for each type of coverage; Bodily Injury (AA), Property Damage (BB) or Collision (DD; damage to the other driver's car if you're greater than 50% at fault).

So, if you cause an accident that is your fault (>50%) and it resulted in all three types of claims (worst case), then your bodily injury, property damage and collision coverage would all rise approx. 20-23%. For example, if you were paying $1200 per year for coverage, then your new rate following an accident with Allstate in Minnesota will now be approximately $1440 to $1476 per year. If you remain accident free going forward for 3 years, then your rate should return to normal or you may then be able to negotiate a lower rate.

This should not be considered financial advice which can only be given by a qualified financial professional. We suggest you consult with a qualified financial planner and/or insurance professional who is most qualified to consult with you regarding policy decisions. Many factors are involved in your policy premium some of which may not be mentioned in this article. We are an affiliate of the Bankrate Insurance Network.

Return to Best Insurance Deals - Get Free Quotes / Car Insurance as low as $20/month!

Home/ Contact Us / Links/ Site Map/ Privacy/