Coverage and Claims
The Cost of an Accident on your Auto Insurance
If you have been unfortunate enough to experience at least one vehicular accident, chances are you're going to pay more for car insurance when your policy comes up for renewal. Insurance industry experts such as Carolyn Gorman, explain that the amount of such an increase will depend upon several factors.
That amount is "going to vary from state to state and from one insurer to another, says Gorman, vice president of the Insurance Information Institute, which is based in New York. "But a lot depends on the nature and severity of your vehicular accident and who's found to be at fault. If you were driving drunk, you are going to be in deep trouble with the insurance company and the law. In that situation, you're likely to have your policy non-renewed. However, you can still get insurance, but it's going to cost you a lot more."
For example, State Farm Insurance Co. typically ratchets up your premium if an insured is found to be "at-fault" for a vehicular accident - meaning any accident in which the company pays more than $750 in property damage liability and collision claim payments, according to State Farm spokesman Bill Sirola. State Farm policyholders should expect to see the increase at renewal time on their liability, collision, and personal injury protection or medical payments coverages, Sirola confirms.
"If you've had a good record, and you've been with a particular company for more than five years, companies such as Allstate won't necessarily bump up your rates if you're found to be at-fault in a relatively minor vehicular accident," says Daniel Kummer, director of auto insurance for the Property Casualty Insurers Association of America, in Des Plaines, Ill.
Your rate rise depends on various factors such as state law and your insurance company rating plan," says Dave Snyder, American Insurance Association vice president and assistant general counsel.
Snyder says that "a minor accident may be forgiven under state law or by an insurance company. On the other hand, there could be severe insurance and legal consequences if there is a major accident with serious bodily injury and the at-fault driver is operating the vehicle under the influence of alcohol. There could be a dramatic increase in insurance rates or even a cancellation of coverage, subject to state law. But beyond that, there could be heavy fines and even jail time involved."
Some companies such as State Farm have a forgive-the-first-accident policy, but qualifications vary from company to company. When purchasing auto insurance, be sure to ask if that particular insurer has a forgive-the-first-accident program and if so, how you might qualify.