Why Does Your Auto Insurance Premium Rise After an Accident?

Your driving habits before an accident can impact your rates after.

You know that sick feeling you get when you hear metal on metal and realize you've been in an auto accident? Your first concern is for everyone in the car and ensuring they're all right. Your second thought may go directly to wondering how much this little mess will cost you.

That's because auto premiums take a bump after nearly any accident. Here, we dive into why your rates may increase following a crash, even if you're not at fault.

Why do rates rise?

We all know that auto insurance companies are, first and foremost, "companies." They're in business to make money. When an insurer sets rates, it considers how much risk it will assume to cover a particular driver.

For example, statistics show that the risk of vehicle accidents is higher among teens ages 16 through 19, according to the Centers for Disease Control (CDC). Males in that age group are three times as likely to die in a car accident than female drivers of the same age. And if there's another teen or young adult in the car? With each young passenger in the car, the risk increases.

It's easy to understand why insurance companies consider teen drivers a high-risk proposition and set their rates to reflect that. On the other hand, according to the Insurance Institute for Highway Safety (IIHS), drivers in their 70s are less likely to be involved in a fatal crash than drivers in their prime working years. And it's not just because drivers in their 70s get behind the wheel less. Statistics show older drivers have fewer police-reported crashes per mile than middle-aged drivers.

Older drivers get a price break because insurers worry less about shelling out for claims.

Takeaway: You can't control your age, but you can seek every possible driver discount -- even after an accident. The idea is to minimize the financial impact of a premium spike.

How much could rates jump? There's no one-size-fits-all answer to how much you can expect your premiums to increase following an accident. However, this table will give you an idea of the average increase in a sampling of states:

How much can I expect my rates to increase?

According to Allstate, how much your premiums increase following an accident depends on several factors. Here are some of the issues your insurance company may consider:

The severity

Every claim is different. For example, if someone hits you from behind and the damage is relatively minor, it's quite different from an accident in which the vehicle is totaled and passengers are hospitalized. The more severe the accident, the more the insurance company is likely to be on the hook to pay.

Who's at fault

If another driver is at fault, it's possible your insurer will not increase your rates at all, particularly if you rarely make a claim. Once a claim is made, your insurance company will assign an adjuster to determine the damage to your vehicle. Another thing the adjuster might do is review the police report and interview those involved in the crash. Working with the insurance company, the adjuster tries to figure out who was responsible for the accident. If it's the other driver, you may get a break.

Your driving record

Even if you've had a stellar driving record, an accident may prompt your insurer to re-evaluate your record. If the accident was clearly a "one-off," the insurance company could decide to leave your rates the same. The decision ultimately depends on the insurer.

Two takeaways:

1. Minimize the chance of a rate increase by carefully protecting your driving record. That way, if an accident occurs, there's a better chance your rates will remain the same.
2. Before you're ever in an accident, ask if your insurer offers accident forgiveness. An accident forgiveness program ensures your rates won't increase after a crash, even if you're at fault.

How long will an accident impact my rates?

Typically, an accident will impact your rate for three to five years. The precise time depends on your insurer, regulations in your state, and the severity of the incident.

Ideally, you'll never experience an auto accident. In the event you do, though, you may need to prepare for a temporary rate increase.