Will my Car Accident Injury Claim Affect my Insurance
Most of us picture the damage caused by a car accident and imagine vehicles crushed beyond repair, serious injuries, and maybe even damage to buildings or other structures. While these instances of loss can and do have deep impacts on individuals and their communities, there’s something else that an automobile crash may cause to increase exponentially: insurance premiums.
According to insurance industry experts, most drivers face claim increases of nearly one-third after an at-fault accident. Even comprehensive claims, which involve factors totally outside of policyholders’ control, are known to command an average percentage increase of roughly 8 percent. It can be daunting to look at figures like these when you’re considering your pocketbook after an accident.
Fortunately, a little knowledge can go a long way in clarifying some of the confusing rules that surround car accidents, auto insurance, and policy premiums. A quick deep-dive into the basics of road and insurance law will serve to illustrate the claims and insurance process.
Types of Accident Claims
Standard (or Collision) Claims
This is likely the type of claim that springs to mind when somebody mentions auto insurance. Standard auto insurance claims are filed alongside a driver’s collision insurance policy. This type of insurance is expressly intended to help offset the costs of repairs should a vehicle be involved in an accident. The accident may involve another vehicle, or it could involve an inanimate structure, like a fence or building.
Collision insurance and claims made through it are intended to protect drivers in the event of:
- Crashes with other vehicles
- Single-car rollovers and other similar scenarios
- Collisions with objects that are NOT vehicles
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None of us ever want to be responsible for causing damage to an unsuspecting victim’s property or health. Unfortunately, accidents can and do happen. If you cause an accident, you must file an at-fault claim with your auto insurance provider.
Drivers may be found at-fault for accidents through either action or inaction. That means that certain active behaviors, like accelerating and hitting another vehicle, indicate fault in an accident. Some inactivities can render a party at-fault for an accident, too. Safe driving requires taking actions and maneuvers; drivers who fail to take these necessary steps can be held liable for accidents.
Comprehensive claims are so-named because they can only be filed by parties who have comprehensive coverage. This coverage, also known as “other than collision” coverage, can help offset the costs of damage in the event of a non-crash accident. Vandalism, fires, and falling objects are all examples of the types of damage that qualify for comprehensive coverage.
If somebody finances or leases a vehicle, the lender may already require comprehensive coverage. Individuals who outright own their vehicles are allowed the option of adding comprehensive coverage or opting out.
- Does cover instances of theft, fire, natural disasters, civil disturbances, damage caused by animals, vandalism, and falling objects
- Does NOT cover instances of damage due to a collision, damage caused by other vehicles during collisions, or required medical expenses following an accident
When the Car Accident Wasn’t Your Fault
It can be difficult to stomach the thought of an already terrible accident continuing to negatively impact you in the future. The fact of the matter is that your insurance rates are somewhat likely to rise after a crash, regardless of your lack of fault. This is due to a concept known as “no-fault insurance.”
No-Fault Insurance and Car Accident Claims
Florida is one of 12 states that require drivers to hold personal injury protection (or PIP) insurance. This is meant to help compensate car accident victims for medical bills, lost wages, funeral costs, and other similar expenses. PIP often extends to cover both the policyholder and any other members of his or her household. It can also cover parties who have permission to drive the vehicle or who may be in the vehicle at the time of the crash.
States considered no-fault insurance states require that drivers obtain PIP. This forces drivers to make claims for accident injuries through their own PIP. Some extenuating circumstances may open the door to pursue compensation through other avenues, but PIP is the starting line for 99 percent of individuals.
No-Fault Insurance Inconvenience
No-fault insurance forces drivers to make claims for their injuries to their own insurance policies. This causes insurers to pay on their policyholders’ behalf with startling regularity, and that cash has to be handed over regardless of whether the policyholder was at-fault for the crash or not.
This practice can cost a pretty penny for insurance agencies. Whilst the concept of no-fault insurance originally surfaced as a means to cut down on unfair lawsuits, it’s led to headaches for policyholders. Claims are paid out promptly, but this often occurs at the cost of savings on premiums in the future.
Car Accident Forgiveness
The fortunate news is that some companies offer reliable drivers accident forgiveness in the case of a bizarre occurrence. Many of today’s most popular auto insurance providers allow their customers to take advantage of this perk. Individuals who have never been involved in an accident before and who maintain a spotless driving history are more likely to be granted this forgiveness than their reckless counterparts.
Some of the most frequently-utilized insurers that offer accident forgiveness programs include:
- The Hartford
- State Farm
How Do Insurance Companies Calculate Premium Increases?
Once you get the first mention of your new rate increase, it can feel baffling. Many of our clients find themselves totally unable to comprehend how or why their new premiums were calculated. The upside to this is that there is some general knowledge regarding the process.
Insurance companies follow a list of steps known as a surcharge schedule. This schedule helps agents work through the factors that could influence a driver’s rates. From here, it’s easy for the insurance agency to determine its desired rate increase.
Many U.S. insurers rely on standards from the Insurance Services Office to calculate premiums. That means that they can only increase their base rate by as much as 20 to 40 percent following a claim.
Factors That Influence Insurance Rate Increases
Outside of an individual’s own unique additional risk (i.e. their likelihood of causing or suffering similar crashes again),claim filing fees also play a part in costly rate hikes. At-fault accidents are known to trigger a slew of surcharges that get passed on to policyholders. These include fees and costs related to:
- Claim adjusters’ time
- Claim representatives’ time
- Parts and labor
Surcharges like these tend to be unaccounted for in monthly premiums. This is one reason why many premiums see an increase after an accident. Even the most basic accident in a no-fault state could incur these minor rate changes.
By How Much Will My Premium Increase?
There’s no way for us to tell you for sure; different states and insurance agencies all have their own guidelines when it comes to what hikes are allowed. State policyholders’ average annual rate after an accident tends to fall around $3,600. That’s a nearly 50 percent increase (on average) in overall policy price just for being involved in an accident.
The Waiting Game: Your Insurance Rates Will Lower Again
It can be difficult to stomach the inflated insurance rates that a car accident can cause. Impacts on insurance premiums range from minor to annual-budget-changing. Insurance companies have the freedom to raise their policyholders’ rates for as long as five years; the average premium increase tends to last anywhere from three years to as long as legally possible.
How Do Boosted Premiums Work?
Generally speaking, your auto insurance premium may spike for as long as the cause remains on your DMV record. The vast majority of accidents will drop from a driver’s record after five years or less. Some, it should be noted, remain in place for much longer. Florida retains alcohol-related violations on drivers’ DMV records for 75 years.
How Does This Translate to Insurance Rates?
To make it simple: Insurance rate calculation is mainly based on your driving record. Once a violation or accident disappears from your DMV record, it’s unlikely to continue negatively impacting your premiums.
Steps to Lower Insurance Rates After a Surcharge
There’s no quick and simple way to slash your rates after they’ve been hiked. Fortunately, however, there are a few steps that drivers can take to try to help inch their insurance rates back down. Some of the easiest and most notable include:
- Boosting your credit score: There is a wide range of credit monitoring and building tools throughout the web. Some are paid and some are free, so curious drivers can take their pick. Your credit score plays a considerable role in influencing your auto insurance rates. Simple ways to maintain or boost credit scores typically involve reducing debts, keeping to a budget, and sorting out issues or discrepancies in credit reports
- Asking about discounts: Chances are that your auto insurance provider offers a healthy variety of discounts for various populations. Most car insurance companies, for example, are happy to give students with good grades discounts on their policies. Other deals to inquire about include multi-policy discounts and other forms of bundling
- Increasing your deductible: Nobody loves a high deductible, but sometimes it’s a necessary facet of lowering your premiums temporarily after an accident. Higher deductibles translate to lower regular insurance rates. Be careful to weigh the benefits and downsides to potentially facing greater out-of-pocket expenses in the event of another accident, though
- Decreasing coverage: Sometimes, one of the only ways to slash your premiums is to accept a decrease in coverage. Most attorneys and insurance experts will advocate that this is your last resort rather than an initial step. Nobody wants scant coverage; but, if you can lower your comprehensive coverage and feel you have no other choice, it could be an option
- Price shopping: Some good, old-fashioned window shopping could be just the trick to snagging lower premiums. We should all be on the lookout for policies offered by other companies that offer improved benefits and/or lowered costs. In some cases, you may even find that one of these providers offerings better-suits your needs, anyway.
- Getting educated: In some cases, insurance companies may offer a discount to drivers who complete additional driver’s education courses after their accidents. Defensive driving courses, in particular, could help cut down on increase premiums during the time after an accident. Your insurance company wants to see you take initiative to drive safely and follow the rules of the road. Doing so could result in a valuable reward.
If you’re willing to take several of the steps listed above, there’s a chance that you may be able to do a little bit of damage control when it comes to your auto insurance rate. Always remember that, in the almost-worst-case scenario, you should be free to move past accidents and violations and obtain normal pricing within three to five years.
Hiring an Attorney to Help
It can cause stress to try to understand how, when, and why your car insurance may go up after an accident. This is easily compounded by a myriad of frustrating factors. These might include potential damage done to your property or the fact that you had zero responsibility for your accident. Florida’s somewhat unique no-fault standing also serves to further complicate the process.
These are just a handful of reasons why we suggest partnering with an experienced and trustworthy car accident lawyer. A qualified attorney can help you navigate the process of insurance premium hikes and may be able to assist you in lowering those premiums. Legal professionals can also pursue compensation for damages or unfair treatment in court and litigate cases on your behalf should your efforts fail.
Dolman Law Group Accident Injury Lawyers, PA
800 North Belcher Road
Clearwater, FL 33765