Car-insurance companies are allowed to increase how much they charge after you have filed a car-insurance claim. However, when shopping for car insurance, if you want to factor the rate increase into which car-insurance provider you choose, it can sometimes be difficult to determine exactly what the rate change will be. Car-insurance providers are required to provide each state they insure with their rates and the system by which they determine how much rates will increase after an accident. In some states, the car-insurance providers are legally required to provide the exact rate increase formula to policyholders. However, it can be difficult to understand the formula. Regardless, you may not see a rate increase, and there are ways you can reduce your rate increase.
Triggering a Rate Increase
Even if you are involved in an accident, there is no guarantee that you will see an increase in your insurance premiums. The severity of the accident plays a role in whether your insurance rates will increase. If you haven't had a claim or incident in over 20 years, a minor accident may not have any impact on your insurance policy. Your rates might not increase if it is found that you were not at fault for the accident. However, your insurance rates are more likely to go up if you are in a no-fault state where your insurance provider pays out regardless of whether or not you are at fault.
Minimizing the Rate Increase
It is possible to reduce the degree to which your insurance rates will increase after an accident. First, you will need to tell your insurer as soon as the accident occurred. If you are sued and then your car-insurance provider decides to pay for your legal expenses, they may increase your premiums further because the failure to inform your provider about the accident prevents the provider from investigating the case and preparing a defense. Find out whether there is an accident-forgiveness policy clause. Insurers accept that some accidents are inevitable and factor this into the rate of premiums. Therefore, your rates may not go up with some insurance providers after your first accident.
If your insurance rates are raised higher than you can afford after a car accident, you can always increase your deductible. This will help reduce your car-insurance rates. You can also shop around for another policy that may offer a lower premium for the same coverage.