Is an Accident Going to Spike my Insurance Rates?
Accidents Play a Role in Insurance Rates
Before you sign your name on anything, it is important that you know exactly what you’re signing up for and what you’re getting yourself into. One of the most crucial documents you need to understand completely is your car insurance policy. Of the many conditions included in your contract, it’s important to know which scenarios can result in higher premiums. This way, you’ll be extra careful to avoid those situations.
Typically, it is an accident that causes an increase in your insurance rates. Typically, but not necessarily.
While it may not seem fair that one accident can cause a spike in your insurance rates, more so if it’s a first and it wasn’t your fault, it’s actually easy to understand why it’s a logical consequence. By being involved in an accident, you’re showing you probably do not have what it takes to do an evasive maneuver to protect yourself, which means this accident could be the first of many. Yes, it’s an unfair judgment, but if you look at it from a business point of view, it’s a reasonable conclusion.
The good news is that an accident does not always have to result in higher insurance rates. Whether it does or not depends on several factors.
Who’s at fault?
If the accident is your fault, there’s no question about it: you can expect your premiums to go higher. If it’s not, there’s no need to worry because unless there are some other circumstances, you won’t see a rate increase.
How much damage occurred?
When it comes to insurance, there is an interesting conundrum. Whether it’s a few hundred dollars worth of damage, or a few thousand, your rate increase is the same. But keep in mind that if you cause a huge wreck that costs many tens of thousands of dollars, then you may end up being dropped by your insurance carrier.
Is it your first accident?
If it is, the situation can go either way. If you’ve only been with your insurance company for a short while, with not much history to use as basis yet, there’s a chance that your first accident can automatically mean higher rates because it’s like an indication of things to come, specifically regarding your driving prowess.
On the other hand, if you have already proven that you are generally a safe driver through your long standing relationship with your insurance company, a first accident might not carry that much weight. More so if your policy has provisions for what is referred to as accident forgiveness. It’s another of those important conditions you should know about your policy.
“Accident forgiveness” is generally a one-time privilege that protects you from getting slapped with a rate hike following your first accident. For some companies, you earn the right to be given this privilege by being accident-free for a certain number of years. For others, you have to purchase this provision and pay for it on top of your basic premium.
If it isn’t your first accident, brace yourself for higher premiums. And the more accidents you’re involved in, the higher the percentage of increase in your premiums. For some companies, too many accidents that happen too close to each other (ex. more than one accident within a 2 – 3 year period) justify cancellation or non-renewal of your policy.
Different companies, different surcharge rates
Many, if not most insurance companies follow similar guidelines in determining whether an accident merits a premium hike or not. They differ, however, in the way they compute or set how much an increase will be, and for how long the increase will stand. Make sure you know the ins-and-outs of your contract to avoid big surprises and also ensure that you do not have to suffer higher surcharges longer than you have to.
Big Sky Collision Center Helps Restore Your Vehicle
Accidents are preventable. But they’re not likely to go away any time soon. If you have been in an accident, whether it was your fault or not, then bring your car to the best auto body repair shop in Billings! Here at Big Sky Collision we train leaders. Those leaders take ownership, and that means you get better service.
If you haven’t been in an accident, keep your car in top shape with a full auto detail! We offer some of the most competitive rates in Billings.