How Much Does Insurance Rate Go Up After an Accident?

Insurance Rate to Increase after a ClaimTake a moment to imagine that you’re someone who’s had a completely clean driving record for years. However, just very recently, there was an accident that you were involved in which has caused a claim on your car insurance to pay for all of the damages that were caused to your vehicle. You’re pretty sure that your insurance rate will likely go up because of the accident.

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But the question remains: after just one accident, what is the standard car insurance rate increase?

Regardless of the insurance company that you deal with, they are required to file rates with insurance departments in every state that they operate. These rates include exactly how they plan to determine rates once one of their customers make a claim following an accident.

There are also some states that legally require insurance companies to provide you with a copy of the surcharge schedule, which lists all kinds of percentages and points; however, you will essentially have to work out for yourself exactly how much of a rate increase you will have to pay.

How Much Can Your Rate Increase?

Many insurance companies follow the standard of raising a customer’s car insurance rate by approximately 20% to 40% of the company’s base rate, which is typically laid out by the Insurance Service Office.

For instance, if you insure two different vehicles at $300 each with a base rate of $400, then following an accident, your insurance company may implement a surcharge of $80 for both vehicles, which would be 20% of the $400 base rate. This would bring the total surcharge to $160, thereby increasing your policy by a total of around 27%.

It’s important to note, however, that different insurance companies operate in a variety of ways when it comes to implementing surcharges. Some may choose to implement lower ones, while others may opt to go with higher ones.

How Will Your Increase Be Determined?

Most insurance companies won’t take into account the factors such as their base rate when determining your overall increment following your claim. Instead, they will typically focus more on the amount that you were paying before your accident occurred. Furthermore, your rate increase will also be affected by the following:

  • Location
  • Age
  • Driving Record
  • Claims made by drivers similar to you

Accident Forgiveness:

While most insurance companies won’t hesitate to raise your rate following an accident, even if it’s only your first one, some companies are willing to give their customers a break when something like this happens. When you make a claim for your first at-fault accident, there is a chance you may not see any increase in your rate whatsoever. This is what’s commonly referred to as “accident forgiveness“. When shopping for car insurance, consider asking if this option is one that a company offers.

Ask Questions:

Ask Your Question to Agent About RateAs previously mentioned, surcharges vary by insurance company. There are some who may even choose to penalize you for moving violations while others focus more on what are referred to as “chargeable accidents,”. This means that your insurance company will be required to pay more than $500 to $750 per accident once your deductible has been applied for any accident that was your fault.

This makes it important to ask questions while shopping around for a car insurance policy, especially when it comes to rate increases following an accident. One of those questions that you should ask should be for a copy of the company’s surcharge schedule before you make any final decision. Another important issue to inquire whether or not your end premium would be without any applicable discounts if you were to end up having an accident within the next twelve months.

What are Surcharges Not Recommended On?

Individual insurance companies have the power to choose what surcharges can and can’t be applied to; however, there are simply some things that common sense says that surcharges shouldn’t be included with.

For instance, the Insurance Service Office has gone on record of stating that they don’t recommend that a surcharge is placed on any accidents where the amount of damage costs under $1,000. These types of accidents are referred to as “property damage only” accidents. Furthermore, it is also recommended that new drivers not be subjected to a surcharge if they have been involved in their first accident, provided they have been driving for less than two years.