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What Happens To Your Car Insurance Rates After Your First Accident?

The first insurance quotes you receive from insurance companies will likely all be in the same price range. That's because all insurers have the same access to your personal information, such as your credit and driving history. Once you finally settle on a provider, your rates will be locked in for the time being.

In many cases, your insurance plan will be reviewed every six months or so depending on how long the term of the policy is. Though you can expect your rates to stay the same, with a small level of variance, it's still important to take a second look at your policy specifics before you renew your current plan.

As long as you remain a safe driver, your rates should not go up dramatically and can even decline with discounts. However, once you get into your first accident, your entire driving record will now be up for review by your insurance provider. This can have a lasting impact on the future of your auto insurance rates.

Circumstances matter

If you're worried about your rates going up immediately, you can relax for just a moment. Insurance companies don't apply a blanket surcharge on everyone who's ever been in an accident. That's because insurers know that every accident is different from the next.

It's important to determine who was at fault. If it turns out that you are completely responsible for the accident, then yes, your rates will likely go up. However, if you were rear-ended without provocation, then your insurer will be much more lenient - not to mention, the other driver's insurance company will have to pay for the damage, not yours.

It wouldn't be fair or just legal practice to raise your rates if you were not at fault for the accident. Still, your rates could increase minutely in either case because this new accident will be on your record. Depending on your age, insurers might predict you'll likely get in another accident in the future, which could result in a rate hike.

Severity of the accident

The amount of total damage is key to settling on a rate increase. For instance, a minor dent or broken headlight is not all that expensive to fix and doesn't inherently cause any risk for bodily harm. As such, your insurance company could choose to leave your rates alone because these types of accidents are common, but easy to resolve.

On the other hand, if your car is severely damaged or even totaled, then it could cost tens of thousands of dollars to repair or replace. In most cases, this will almost certainly lead to a rate hike because this would be the type of situation insurance companies try to avoid the most. If you have an additional medical coverage policy, then payouts from your insurer could be even higher, which means you are now a much more considerable risk as a policyholder.

Time between accidents

Though it's your first accident, it could be indicative of future behavior in the eyes of insurers. That's why it's crucial to factor in just how much time passes between your first and second accident.

Suppose your rates go up because you are a young driver who just got into a wreck. Afterwards, if you maintain a stellar driving record, then your rates may go back down incrementally. However, if you get into a second accident a few years after your first, then rates will stay elevated for a longer period of time.

For older drivers who are accident-free for years or decades, a rate hike may not occur because you have an extended history of safe driving.

What to expect

Remember, your insurance rates are ultimately an indicator of how risky of a driver you are. They are also personalized to your situation to some degree, so just because you are in one accident doesn't mean your rates will increase the same amount as another person. A crash in one state may be more expensive than in another. Further, speed, type of car and level of coverage will also be factored into the equation.

To combat any confusion regarding this process, it's best to speak openly and honestly with your car insurance agent. There are typically numerous discounts available for those who maintain a safe driving record, for which you could be eligible if you weren't at fault during your first accident.

In addition, it could take weeks or months for the insurance company to settle all the claims. In the event you are unsatisfied with your rates, you can always take your business elsewhere. Competing insurers may view your driving history in a different light and offer you better rates than your current provider.

CoverHound is a leading online provider of insurance quotes.

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Insurance shopping simplified

Review personalized quotes, select coverages, and buy online - Everything insurance, all-in-one-place.

Insurance shopping simplified

Review personalized quotes, select coverages, and buy online - Everything insurance, all-in-one-place.
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