Accidents happen, no matter how careful you are. It takes one misstep to send you reeling in your vehicle, literally. When you’re in an accident, the last thing you want to worry about is your car insurance company, but you may not be so lucky.
Oftentimes, if you make a claim for an accident on your insurance, the company sees that as a justified reason for raising your rates. As a result, many people don’t make claims to their insurance for small fender benders or cosmetic damages—if the car is still functional, they’d rather live with the broken pieces than pay a higher premium for the next 3-5 years.
Rates don’t always go up following a car accident, however. There are many situations in which you can make a claim without paying a higher premium. It’s important to understand exactly how car insurance companies evaluate an accident in order to decide if your rates should change.
When You’re Not at Fault
Rest assured that if you’re the victim of a car accident rather than the cause, you shouldn’t experience a raise in rates. You’ll probably notify your insurance company that you were in an accident, but you don’t have to make a claim as this is the responsibility of the person at fault.
If you’re not at fault, you shouldn’t receive a rate increase, as you’ll be billing the at-fault party’s insurance company. If their insurance company refuses to pay, you don’t want to make a claim to your own insurance company, as that can raise your rates. Instead, file a claim against the at-fault party’s insurance company to receive the compensation you’re rightfully owed.
Evaluating Your Driving History
Car insurance companies will also consider your driving history. If you’ve been with one car insurance company for several years, this can help your case, as they’ll have an accurate record of any past-reported accidents. Otherwise, they’ll pull your record using your driver’s license number.
Many factors will be considered including your time driving, number of speeding tickets, previous accidents, and any criminal history. Those with a safe driving history may not experience a rate increase if this is the first infraction on their record, especially if your policy has an accident forgiveness clause. Those who have had many accidents or other violations will likely see an increase in rates.
Cost of Damages
Insurance companies will also evaluate the value of damages. This may include property damage and medical bills if that’s part of your policy. Most insurance companies will not raise your rates if the damages are less than $1,000, so a small fender bender or ding in a door may not result in a rate increase. Unfortunately, one study showed that the average accident for a $2,000 claim came with a 44 percent rate increase.
With an accident forgiveness clause, you’ll likely be excused from any accident with damages greater than $1,000. However, your insurance company may put a limit on their forgiveness if the accident results in a payout worth tens of thousands. Read your policy carefully to understand the potential rate increase that may come with an accident of a certain value.
Acts of Vandalism Typically Don’t Raise Rates
It’s also important to note that accidents and vandalism are treated differently according to your insurance policy. In most cases, acts of vandalism will not increase your rates if there was nothing you could do to prevent it. For example, if someone breaks into your garage and takes your car for a joy ride while you’re away on vacation, the insurance company won’t pin fault on you.
The insurance company may see you as partially at fault in some situations, however. For example, if you parked your car in an unsecured lot while you were out of town and the tires are gone when you return, they may not be as forgiving if you have a bad driving history.
It’s important to be cautious when driving or parking your vehicle, but don’t be afraid of your insurance company. It’s your right to receive compensation for accidents or vandalism, and you may be able to negotiate the rate increase on serious accidents.
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