Comparing Auto Insurance Companies: Which Offers the Best Rates After an Accident?

August 20, 2023 by in Uncategorized

When it comes to auto insurance rates after an accident, different insurance companies have varying policies. While these rates also differ by state, it’s important to consider the forgiveness policies of your insurance company. If your current insurer has doubled your rates after an accident, it may be wise to explore other options. Not all insurance companies will increase rates to the same extent.

Many insurance providers offer accident forgiveness policies, which means they will overlook or “forgive” your first auto accident and maintain your current rates. Depending on the insurer, accident forgiveness may come at an additional cost or can be added to your policy. This is especially beneficial if you have been in an accident before or reside in a state with less forgiving policies.

Some companies automatically provide accident forgiveness after a certain number of years without any accidents, typically five or more years. For example, State Farm offers accident forgiveness after nine continuous years without accidents on your driving record.

Here is a breakdown of the best auto insurance companies if you have been in an accident:

CompanyYearly RatePost-Accident Rate% Increase
State Farm$1,623$2,02024%

State Farm also stands out with the lowest rate increases among the five largest insurers, with only a 24% increase after an accident resulting in a bodily injury claim. In contrast, Geico, Allstate, and Progressive experienced rate increases of at least 50% for full-time auto insurance coverage on average after an accident causing injury.

Different insurance companies have varying criteria for defining an accident, which can impact the extent of rate increases. State Farm, for instance, considers a claim to be an accident only if it exceeds $750 in collision and liability coverage and if the driver is at least 50% at fault. Geico has similar requirements with a $500 coverage limit.

These distinctions are crucial because not all insurers will raise rates as significantly if there are special circumstances surrounding the accident. Accidents can occur at any time, and policyholders should not be penalized if the accident was not their fault. In some cases, providing proof of non-fault may be necessary, but it is worth the effort to maintain low auto insurance rates.

The duration an auto accident remains on your record also affects your insurance rates. If the accident occurred several years ago, its impact on your current rates should be minimal. However, recent accidents will likely result in immediate rate increases. Typically, auto insurance rates return to normal within three to five years after an accident, allowing sufficient time for the accident to be cleared from your record. Some insurance providers may require evidence of improved driving habits, such as completing a safe driving course, to restore your previous rates.

On average, if you have been involved in a car accident within the past six months, your rates may increase by approximately 60% during the next policy renewal. This increase gradually decreases over time. Two years after an accident, the average rate increase is about 47% higher than before the accident, and after four years, it is only about 2.4% higher. By the fifth year, rates should return to normal.

Auto insurance companies perceive individuals who are at fault for an accident and have made liability claims as more prone to repeat incidents. This explains why insurance companies charge higher rates for individuals with accident histories. However, the farther in the past the accident occurred, the less it affects insurance rates.

While insurance rates usually increase after an accident, there are exceptions to this rule. Generally, if you are not at fault, your rates will not rise significantly. However, determining fault can be complex. Even if you are 50% responsible, insurance companies may not increase your rates substantially. Yet, for new policyholders, rates may still increase even if they share only partial responsibility. Proving non-fault can be challenging for drivers.

State Farm specifies that a driver is not at fault if any of the following circumstances apply:

Insurance companies typically review the last three years of your driving record before policy inception to determine rates. Consequently, an accident from five years ago should not affect a new policy. However, this primarily applies if you have been with the same auto insurance company for several years and are enrolled in an accident forgiveness plan.

No-fault accidents usually result in a 12% increase in insurance rates. However, this percentage depends on the insurance company and state regulations. For instance, in Oklahoma and California, insurance providers are prohibited from raising rates after not-at-fault accidents. State Farm, as of 2017, does not increase auto rates at all for not-at-fault accidents.

It is essential to note that in no-fault states, your insurance company may still have to cover expenses for an accident you did not cause. In such cases, even if you were not at fault, your rates may still increase. Additionally, if you are involved in an accident with an uninsured driver, your insurance company may not cover the damages, depending on your policy and coverage. These factors influence how your premium is calculated after an accident.

To prevent insurance rates from increasing after an accident, there are several steps you can take, even if you are at fault and not eligible for accident forgiveness:

  1. Inquire about additional discounts: Insurance companies often offer discounts for good student grades, multiple policies, and using safe driving apps. Ask your insurance provider about available discounts.
  2. Consider increasing your deductible: Raising your deductible, although it may lead to higher out-of-pocket expenses in the future, can lower your premium. Discuss this option with your insurer if you were at fault in an accident and your rates increased.
  3. Assess the possibility of reducing coverage: Not all insurers permit coverage reduction after an accident, but if available, it can help lower your rates. Ensure that you still maintain the minimum required coverage for your state.
  4. Shop around: When dissatisfied with your insurance rates, it is advisable to explore other companies. Different insurers may handle your situation differently, and their rates may vary. Don’t feel obligated to stick with an unfavorable rate; accidents happen.
  5. Improve your credit score: Some insurance companies and states consider your credit score when determining rates. A high credit score can potentially lower your auto insurance rates, even after an accident. Inquire with your insurer about the impact of your credit score on premiums.
  6. Review different insurance companies’ premium calculations: Comparing how various providers calculate premiums can help you make an informed decision. Ensure that the quotes you receive from different insurers are not identical.
  7. Adjust your policy: As a general rule, purchase as much car insurance as your budget allows. However, if your no-fault accident prevents you from finding affordable insurance, consider reducing the coverage on your policy. Increasing the deductible can also result in a lower premium.
  8. Consider defensive driving courses: Some insurers may require you to complete a defensive driving course after an accident. Taking such a course can lower your rates and reduce the likelihood of future at-fault accidents. In certain cases, you may be able to remove tickets or points from your license by completing a safe driving course.
  9. Practice safe driving habits: Even if your insurer does not directly reward or acknowledge safe driving, maintaining safe driving habits can prevent your car insurance from increasing. Always prioritize safe driving practices.
  10. Seek advice from professionals: Consulting with insurance professionals and brokers can provide valuable insights and guidance in navigating insurance rates after an accident.

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