How To Reduce Your Car Insurance Rates After an Accident


You swerved for a skunk and wrecked your ride; now your car insurance is going to double, right? Not necessarily. With the right insurer — or some clever maneuvering — you can still save money on car insurance after an accident.

If you’re reading this article, you are probably one of the 11 million Americans who got into a car accident recently. First, we hope no one was seriously hurt.

Secondly – and we hate to give you more bad news – there’s a chance that even if you weren’t injured at the scene, you might feel some pain in your pocket the next time your car insurance is up for renewal.

Then again, there’s a chance that your car insurance premium, the amount you periodically pay to an insurer for taking the risk of covering you, may stay the same. “If the accident is not your fault, it’s the first in which you’ve been involved, and your driving history is free of moving violations and/or insurance claims, you may have no premium increase at all,” says Loretta Worters, Vice President of the Insurance Information Institute, a non-profit dedicated to helping the public understand how insurance works.

But if you’re to blame, or your insurance company feels that you’ve just been in too many accidents (even if none have been your fault), your premium will likely increase.

Exactly how much more you’ll be paying varies from company to company and depends on the severity of the accident. “If you are at fault and someone is injured, you will most likely lose your good driver discount and could see a 20 to 25 percent premium increase,” says Worters. “These increases generally stay on your premium for three years.”

But don’t panic. Here’s some advice on how you can put the brakes on any premium increases after you’ve been involved in a car accident.

Tell your insurer about the accident, no matter how small it was.

If you caused a minor accident in which no one was hurt, or you weren’t at fault, you may be tempted to just not tell your insurance company about it. If they don’t know about it, they can’t increase your premium later, right?

Wrong. “If the other driver sues you weeks or months later, your failure to report the accident immediately might cause your insurer to refuse to the honor the policy,” says Worters. That means you’ll be stuck with all the legal bills and any potential judgments in the plaintiff’s favor. Those bills will likely be far higher than any premium increase.

If they do decide to honor the policy, the weeks or months in between the accident and the legal battle is a time they could have better spent investigating the accident and preparing your defense. In other words, you’re increasing the odds they’ll lose the case. And if they do up pay a claim, they’ll likely increase your premium.

Ask if your policy includes an accident forgiveness clause.

Statistics show most drivers will get into one car accident every 17.9 years. Because some insurers have accepted that accidents are simply a part of life, they’re willing to ignore your first mishap and not raise your premium.

“The details vary by company,” says Worters. “Some may give you accident forgiveness immediately, while others will only do so after you’ve been an accident-free policyholder for as many as three to five years. They also may require no moving violations for three years.”

Take a driving class.

You probably thought you saw the last of driver’s ed when you were 16. But if you dust off your old notebooks and take a refresher drivers’ course, your insurance company may see this as a sign that you’re looking to improve your driving skills and show mercy on you come renewal time.

“It won’t help if you were caught driving recklessly or under the influence,” says Worters. “But otherwise, it might help reduce rates. Don’t wait for your insurance company to ask you to do this. Do it on your own and tell them about it.”

Increase your deductible.

If your insurance company does raise your premium, you can still lower the amount by increasing your deductible, the amount you’ll pay after you file a claim and your insurance kicks in.

For example, according to the III, increasing your deductible from $200 to $500 could reduce your car insurance coverage cost by 15 to 30 percent. Going to a $1,000 deductible can save you 40 percent or more. But before you do this, ask yourself if you’ll have the $500-$1,000 to spend if you get into another accident.

Take advantage of other discounts.

There are other ways to lower the cost of your premium, including:

  • Dropping collision and comprehensive coverages on older cars that are worth less than ten times the premium (you can find out what your car is worth at Kelley’s Blue Book).
  • Asking if your rate can be lowered if you drive less than 10,000 miles per year, the average number of miles insurance companies assume people drive. Those who carpool or take public transportation to work or school may qualify for such a discount.
  • Asking if your rate can be lowered if you’ve been a long-term customer.
Shop around for a new policy.

If you’re still not happy with your renewal rate, shop around for a new car insurance policy. Premiums vary substantially from company to company. If you have home insurance through another company, include it on your list of potential car insurers.

When you “bundle” your home and car insurance with the same company, you’ll get a discount. When calling these companies or obtaining quotes online, make sure you are consistent in comparing the amount and type of insurance you are purchasing. Also be sure to ask each company for the discounts discussed above.

The companies will ask you to report any accidents and moving violations you’ve received over the last few years. Don’t lie. They’ll discover any reported accidents or tickets in their databases.

Keep in mind that money shouldn’t be the only factor when making your final decision. “Select an insurance company that has a reputation for good customer service and is financially stable,” says Worters. “Check consumer publications and your state insurance department for customer satisfaction surveys and find out if they are financially stable through rating companies such as A.M. Best.”

Here’s hoping you don’t get into another car accident for at least 17.9 more years!


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