Getting into a car accident is stressful enough for your health and overall well-being. But did you know that it may also warrant an increase in your insurance rates? Bet that just added to your stress levels.
There are already multiple factors that can affect your car insurance, but apparently, here’s a few more. Read on to know the reasons as to why your insurance rates increase after a car accident.
Understanding Auto Insurance Policy And Rates
Auto Insurance is the contract and legal agreement between you and your insurance company that shields you from financial loss in the event of theft or accident. That includes bodily harm and physical injuries that resulted from a car wreck or traffic collision, and against any and every liability that could stem from vehicle incidents.
Your insurance premium is the amount you pay regularly. It may be as often as every month or perhaps bi-yearly, depending on what was agreed on. It is the installment that you agreed to pay for insurance related to vehicle accidents.
Every insurance company has its own factors of determining rates. Though, your premium is mostly based on your personal details. Some of the factors they consider are personal information, car type, coverages, discounts, credit, driving history, people on policy, and deductible amounts.
Upon paying the premium, the insurance company will concur to pay the coverages as agreed upon in the insurance policy. Coverages of the policy includes property, liability, and medical.
Property coverage consists of the damage to the car. Liability includes the legal responsibility you have to others for physical damage and bodily harm. Lastly, medical covers the cost for treating injuries, lost wages, rehabilitation, and funeral expenses.
Your auto policy will be able to cover you and your family members. It will also cover someone who is driving your car with your explicit consent. Your policy will only cover personal driving, including commuting, taking trips, and running errands. It will not, however, cover commercial purposes such as deliveries and business reasons.
Your insurance rates can also increase for various reasons. One such reason is car accidents. You might get tangled into some serious legal loopholes, which is why it is ideal to get an attorney following a car crash to protect you against claims from the other party. Your attorney is especially helpful in negotiating on your behalf, strengthening your claims’ value, and collecting evidence.
In the unfortunate event of a car accident, it might help know why your insurance rates had increased.
7 Reasons Why Insurance Rates Increase After a Car Wreck
1. Cost And Severity Of Claim
The overall damage and aftermath are necessary to consider. The severity and the cost of a claim are key and vital factors to know whether your insurance premium will increase or not. There is a great difference and gap between a minor injury and a totaled car or permanent disability. The latter will obviously cost you a huge increase.
2. Driving Record
One of the factors auto insurers consider when calculating your car insurance policy costs is your driving record. Based on driving history, those drivers evaluated as higher risks than others are charged with a higher premium.
3. Driver At Fault
Your insurance rate may also increase depending on whether you are at fault for the accident. Your insurance company may review the police report and conduct an investigation themselves. They may interview those involved and assess the damage, photos, and other shreds of evidence.
4. Injured Driver Due To At-fault Accident
At-fault accidents will no doubt increase your insurance rates. However, an injured driver will up that cost even higher.
5. Totaled Car Due To At-fault Accident
Totaled came from an insurance term, which means a total loss. This means that a car is either irreparable or the cost for repair is higher than its actual worth. A totaled car will increase the rates of the one at-fault of the accident.
In the case of your car being the one totaled, be sure to report it. Call and talk to your agent to report an insurance claim. Your insurer will then determine the total loss of your car.
6. Not-at-Fault Accidents
Even if you are not the person at fault for the accident, your premium may still increase. The reason is that an accident is still added to your record. Insurance companies typically increase rates after car wrecks, regardless of whose fault it was.
Though, there is such a thing as accident forgiveness. They are features on insurance policies to protect your driving record from being influenced by no-fault accidents, hence preventing your premium from increasing. You will have to be accident-free for an amount of time to qualify for accident forgiveness. Also, not all policies have them, so be sure to look out for them.
7. Uninsured Driver
Being involved in a car accident with a person without car insurance means that you might need to turn to your own insurer to cover the damages. This would also guarantee an increase in rates.
Ways To Reduce Rate After An Accident
A car accident is unpredictable. It’s not something that can be easily avoided and prevented. The added stress of the insurance rates going up after the accident isn’t helping. Fortunately, there are ways to reduce your insurance rates after being involved in an accident.
- Adjust Coverage
If your premium becomes too much, there’s always the option of adjusting your coverages by lowering them to reduce the costs. Though, keep in mind that that would mean you are less protected.
- Find Another Provider
If your current premium is giving you a hard time after a car accident, acquiring quotes from a different provider might warrant a lower rate.
- Check And Consider Discounts
Check your discounts and see if you qualify for them.
- Improve Your Credits
Your credits are one of the deciding factors your insurers consider when pricing your policy. Improving your credits might give you a lower premium.
Accidents are unfortunate and sometimes tragic events that can affect a person’s life tremendously. Having auto insurance can help lessen the burden of the consequences of that unforeseeable occurrence. And being a big commitment, it might help to understand the need-to-knows about insurance rates, such as why they increase and how to reduce it.
