What is the average increase in car insurance premiums following an accident?
Nearly 6 million car accidents occurred in the U.S. in 2022, as per the National Highway Traffic Safety Administration. Experts attribute the increase in accident rates to factors such as distracted driving and rising temperatures caused by climate change.
Even if you weren't at fault in a car accident, your insurance premiums may still increase significantly.
Shop for the best car insurance rates
How much does car insurance go up after an accident?
The increase in your insurance premium following an accident is determined by several factors, including your insurance provider, the state you reside in, the type of vehicle you own, the severity of the crash, and whether the accident was your fault.
"If you're not at fault, your rate will increase by 10% or less, according to Brian Moody, executive editor at Kelley's Blue Book. However, if you're at fault, you can expect a higher increase of around 45%."
While not all carriers are the same, Allstate and Erie have been found to increase their rates by less than 30% on average following an at-fault accident, according to a Bankrate analysis of Quadrant Information Services data.
How long will an accident affect my car insurance?
According to Moody, the average duration of a car accident remaining on one's record is between three to five years. However, this can vary by state; in Pennsylvania, it's one year, while in Massachusetts, it's six years.
Your Motor Vehicle Report, generated by your state's Department of Motor Vehicles, can be reviewed by insurance companies to assess your driving record. This report includes any moving violations, traffic tickets, and accidents. If you made a claim for repairs resulting from an accident, it will be reflected on your CLUE report.
Will my rate go up even if the accident wasn't my fault?
If an accident is reported to either the police or your insurance company, it could result in a premium increase, as insurers assess risk, not blame. Additionally, statistically, the more crashes you're in, the more likely you are to have another in the future.
Some states, such as Oklahoma and California, forbid insurance companies from increasing rates following an accident that was not the policyholder's fault.
How to prevent a rate increase after an accident?
If you're involved in a minor car accident with another driver, you may be tempted to pay for repairs yourself rather than filing a claim with your insurance company.
If you don't disclose an accident to your insurance provider, it could result in your policy being invalidated, even if it keeps your rates from increasing. In some cases, such as in New York, an accident report must be filed with the Department of Motor Vehicles if damages exceed $1,000 or if anyone is injured.
Accident forgiveness is available from many auto insurance companies, either as a standard feature or as a separate rider, which helps maintain insurance rates following an accident.
According to Friedlander, your rate won't increase due to your first at-fault accident because they typically forgive such incidents.
In most states, Progressive does not increase rates for a small claim (under $500). After five years of being accident-free, even a larger accident can be forgiven.
When you purchase or renew your Progressive auto policy, you can add accident forgiveness benefits and receive one forgiven accident per policy period.
Accident forgiveness is a standard feature in some insurance policies, but carriers may charge an additional fee for it, up to 9% of your premium. This is significantly less than the 40% increase in premiums you could face after an accident, but it's a waste of money if you don't use the benefit. Some states, such as California, do not allow insurers to offer accident forgiveness.
How can I lower my insurance after an accident?
Several ways to lower rates after a crash increase include.
Make changes to your coverage
If you receive an accident surcharge, the first step is to review your coverage and identify areas where you can reduce expenses.
If your state doesn't mandate personal injury protection or medical payment coverage, you may choose to eliminate them. Additionally, if you own an older car that is fully paid off, you might consider dropping collision or comprehensive insurance. USAA offers the most affordable rates for liability insurance, but it is only accessible to veterans and military families. Among national carriers, State Farm provides some of the cheapest minimum coverage policies.
Increasing your deductible can lower your monthly premium by up to 40%, according to the Insurance Information Institute.
Shop for new insurance
""Shopping for insurance is free, and you don't have to stick with your current insurer if they increase your accident surcharge. You'll receive different quotes from various companies regardless of your driving record," said Friedlander."
Both Geico and Progressive are top picks for high-risk drivers, offering lower-than-average rates for individuals with a history of at-fault accidents.
Look for discounts
"Friedlander advised that if someone has an accident surcharge, they should take advantage of as many discounts as possible because there are numerous programs they can qualify for and significant savings can be obtained."
Farmers Insurance offers the most discounts out of all auto insurance providers we've reviewed, with 23 options available. However, not all discounts are available in every state, and some cannot be combined.
Common discounts include:
- Bundle your auto and homeowners insurance policies with the same company to receive a discount. Farmers and Nationwide offer up to 20% savings, while Amica promises up to 30% off.
- Geico offers a discount of up to 23% on safety devices such as airbags, anti-lock brakes, automatic seatbelts, and daytime running lights.
- Completing an approved driver's ed course can help prevent accidents and earn you a discount of up to 10% with American Family Insurance.
- Setting up automatic payments and going paperless with Auto-Owners will earn you a discount on insurance.
Improve your credit
Insurance companies use credit history to determine rates in most states, but California, Hawaii, Maryland, Massachusetts, Michigan, Nevada, Oregon, and Utah prohibit or restrict the use of credit-based insurance scores. To improve your score and lower your premiums, you can pay credit card bills and other debts on time and in full, and reduce the amount of credit you're using.
Experian Boost™ is a complimentary service that reports additional information to credit reporting agencies, such as rent, phone, and subscription service payments. As per the company, individuals who utilize this service see an average increase of 13 points on their FICO score.
Buy a different car
Trading your flashy vehicle for a less flashy ride could lower your insurance rates after an accident.
"According to Moody, insurers determine premiums based on the cost of repairing a car. Even if an accident causes an increase in insurance, the overall rate should be lower because the insurance company's risk has been reduced."
Get the best rate for a car loan
Why trust CNBC Select?
Our goal at CNBC Select is to deliver top-notch service journalism and in-depth consumer advice to our readers, enabling them to make well-informed decisions when it comes to their finances. Each of our car insurance articles is the result of thorough reporting by our team of expert writers and editors, who possess extensive knowledge of pet insurance products. At CNBC Select, we take pride in our journalistic standards and ethics, and we ensure that all our content is created without any input from our commercial team or external third parties. We earn a commission from affiliate partners on many offers and links, but this does not affect the quality or objectivity of our content.
Stay up to date with CNBC Select's comprehensive coverage of credit cards, banking, and money by following us on TikTok, Facebook, Instagram, and Twitter.
Not all lenders use Experian credit files or scores, and some may not see improved scores or approval odds.
