Should You Change Car Insurance Providers Right After an Accident?

Car accidents can send auto insurance rates skyrocketing. The average annual premium for a driver with a clean record was $2,389 last year. One accident bumped that figure to $3,370 per year.

Drivers who find themselves at fault for an accident might be wondering what their next move should be. Should they shop around for new coverage right away, stick it out with their current insurer, or maybe just stay quiet about the whole situation? The answer might surprise you.

It's tough to keep a car accident hidden

Drivers who cause a minor fender bender and pay for the damages out of pocket can avoid filing a claim with their car insurance provider. These accidents won't affect their auto insurance premium because the insurer doesn't know about them and doesn't have to pay for them.

But when a driver files a claim, their insurance provider will automatically update its record to include information about the accident. This data goes into the Comprehensive Loss Underwriting Exchange (CLUE) report where other insurance companies can view it. If a police report is filed for the accident, chances are insurance companies will be able to view this as well.

So there's really no way to sneakily switch insurers before they become aware of a driver's recent accident history. They'll check the driver's CLUE report and other records before selling them a policy. And even if a driver was somehow able to get a policy using false information, the insurer could later increase its rates or even deny coverage if it finds out.

The best time to shop for car insurance after an accident

It's best to wait until the dust settles to shop for new car insurance. The immediate aftermath of an accident is stressful enough. Just focus on getting through that and paying any applicable bills, like the insurance deductible.

Wait to shop for new coverage until the current insurance provider quotes a new price for the next policy term. It will most likely be higher than the previous rate, but there's no way to know how much higher. Some companies penalize drivers more for accidents than others. 

Once this quote comes through, compare it to rates from other insurers. Keep the details of the accident handy as online quote tools will ask for this information. Then, see which company offers the best deal. 

It might be tempting to focus on price alone, but that's not the only factor to weigh. Think about coverage options and customer service as well. Choose the provider that offers the best all-around coverage.

If none of the quotes are particularly budget-friendly, raising the deductible is an option. This increases the driver's out-of-pocket costs in the event of an accident, but it reduces monthly premiums. 

Reducing coverage is another possibility, but it should be a last resort. Insurers are only legally required to pay up to their policy limits if one of their drivers causes an accident. If the policy limits aren't enough to cover the full cost of the accident, the driver will have to pay for the remainder of the damages out of their own pocket.

The good news is that accidents only stay on a driver's record for three to five years. Over time, they'll affect a driver's rates less and less until they're no longer a factor at all. So keep shopping for coverage once or twice per year to see if there are better rates available.