Here's How Much an Accident Raises Your Auto Insurance Rates

When you're in an accident, your auto insurance rates go up. The accident doesn't even need to be your fault. To car insurance companies, any accident indicates that you're a higher risk, even if another driver caused it.

If you're wondering what kind of a rate hike to expect, The Motley Fool Ascent recently released data on how your driving record impacts car insurance rates. Here's how much rates increase, and the best car insurance companies for drivers who have been in an accident.

An accident raises your auto insurance rates by over 20%

Drivers who have clean records get the lowest car insurance premiums, paying an average of $2,706 a year. Drivers with an accident on their record pay $3,284. On average, an accident raises auto insurance rates by 21.4% and costs drivers an additional $578.

As you can see, it pays to be a defensive driver. A single accident costs drivers nearly $50 a month, on average. And rates will increase even more if the accident is combined with other negative items, such as traffic violations.

Keep in mind that your insurance rates depend on many factors. Your driving record is important, but it's just one of them. Where you live is arguably even more important, as insurance costs much more in some states. There are also states that tend to punish drivers with accidents more than others.

For example, Alaska has low car insurance rates, and they don't go up much with an accident. Average rates are $1,831 with a clean record and $2,017 with an accident -- an increase of $186 (10.5%). Michigan is the opposite. It has the highest rates in the nation: $4,664 with a clean record and $6,156 with an accident. That's an increase of $1,492 (32.0%).

The best car insurance companies after an accident

The most affordable car insurance companies for drivers with a clean record also offer the lowest rates after an accident. On average, USAA and Geico have the best prices.

USAA has the lowest rates among major car insurance companies. It charges an average of just $1,508 for drivers with a clean record. Premiums go up to an average of $1,976 with an accident. Note that USAA is only available to military members and their families.

Geico is available to anyone, and it also has low prices. Drivers with clean records pay an average of $1,750 per year with Geico. After an accident, that goes up to $2,287.

Many insurance companies offer an optional add-on called accident forgiveness. You pay a bit more for premiums, but if you're at fault for an accident, your insurance company won't automatically raise your rates. You could still lose safe driving discounts you previously qualified for, and your rates can go up when you renew your policy.

How to lower your car insurance rates after an accident

It's frustrating when your bills get more expensive. And car insurance could get a lot more expensive after an accident. But there are also ways to lower your rates. Here are a few tips for how to do this:

• Shop around for car insurance. While USAA and Geico have the lowest average rates, that doesn't mean they're the lowest everywhere or for everyone. The only way to be sure where you can get the best rates is by pulling car insurance quotes from multiple carriers.
• Check out the car insurance discounts your carrier offers. For example, you may be able to get a discount after an accident if you complete a defensive driving course.
• Make changes to your policy. You could get rid of coverages you don't need or raise your deductible to get lower premiums.
• Improve your credit. In most of the United States, car insurance companies use your credit score when setting your premiums. If you raise your credit score, it can cut your car insurance costs.

You can't entirely eliminate the risk of getting in an accident. But you can lower it quite a bit if you're a defensive driver. This keeps you safe on the road, and it's good for your finances, too.