How Much Does Your Car Insurance Go Up After An Accident?

February 21, 2023

damaged-bumpers-from-car-accident-royalty-free-image-1627577627 — Source: caranddriver.com

The first thought that storms your mind after landing in a car accident is whether or not you are at fault. A momentary lapse of attention on your end might result in an accident. However, the financial implication of the incident may haunt your wallet for at least six years!

Often, you may wonder “how much does your car insurance go up after an accident?”. To give you a brief answer, the increment in your premium may range from 25% to 47%, or even higher, depending on the accident’s severity.

Top insurance companies in Canada use complex formulas based on their parameters to determine your risk profile. Accordingly, they increase your car insurance premiums. This explains why drivers reach out to established insurance brokers like Surex for affordable policies.

How do insurers decide the increment in your premium?

So, if you are thinking how much does car insurance go up after accidents, you need to check whether or not you are at fault. Insurers consider the party at fault before determining a spike in premiums. You will come across accidents being categorized into two types:

At fault accidents
Not at fault accidents

What are at-fault accidents?

As the nomenclature implies, at-fault accidents include incidents where you are responsible for the mishap. The share of fault can vary from one accident to another. At times, both drivers may be at fault. After carrying out an investigation based on a police report, the insurance company can identify the culprit.

Now, if you are found guilty of disobeying traffic norms that caused the accident, your insurer might increase the premium. Your share of fault for the accident may range from 0% to 100%. Now, the percentage of this share determines how much your premium would increase.

Some of the instances of at-fault accidents include:

Impaired driving leading to a fatality
Rear-end collision
Changing lanes leading to accidents
Disobeying traffic signals
Distracted driving
T-bone accident
Speeding and rash driving

A statistic reveals that if you are at fault in an accident involving property damage in the US, your premiums can increase by 45%. Likewise, if the accident results in injuries, be prepared to accept a 47% rise in insurance premiums.

Given that an accident remains on your driving record for up to 6 years, you need to pay higher premiums for a pretty long time.

What are not-at-fault accidents?

At times, accidents occur due to the fault of the other driver. So, if you obeyed the traffic norms and respected the established rules of the road, you can get a clean chit following the accident. In these situations, your insurer would not increase your premium. Neither would these accidents tarnish your driving record.

However, it’s imperative to inform the Police and report the accident after it occurs. Make sure not to leave the site of the accident. Here are some instances where you might not be at fault in an accident.

Being the victim of a hit-and-run accident
You had legally parked your car when it sustained damage
Another vehicle struck your car from the rear

If you are found not to be at fault, rest assured that your insurer wouldn’t increase your premium.

How much does auto insurance go up after an accident in Canada?

How much does car insurance go up after an accident depends on the extent of the damage. In some provinces in Canada, the government has established norms regarding the spike in premiums.

According to the Ontario Insurance Act, insurers cannot increase your premium if the overall value of damage in an accident is less than $2,000. Certain criteria must be fulfilled in these situations to prevent a spike in premiums.

You should settle the expenses yourself without filing a claim
There must be no injuries resulting from the accident
The insurance company doesn’t pay any compensation to the affected party

Accident forgiveness insurance: How does it save you from a premium hike?

Accident forgiveness insurance is actually a rider or add-on that serves as a free pass. In case you land up in an accident, your accident forgiveness insurance can come into play and compensate for the damage. This implies that the accident wouldn’t affect your driving record even if you are at fault. So, insurers won’t increase your premium if you have this rider to absorb the shock.

However, an accident forgiveness policy won’t come to your rescue all the time. Some insurers provide these benefits to responsible drivers with no report of a collision on their track record in the last six years. Also, you can use the benefits once per three years.

Now if you have an accident forgiveness policy and get involved in a minor accident, your insurer might not increase your premium. However, you are required to stick to the same insurer throughout these years to benefit from accident forgiveness.

How to keep your policy affordable after an accident?

Drivers habitually struggle to keep their policies affordable following an accident where they are at fault. We have recommended some guidelines that would help you keep your premium manageable.

Look for discounts

Working closely with insurance brokers, you can capitalize on discounts and deals from top insurance companies. Rather than hunting for the right policy, you need to consult a broker since they are aware of the deals.

Take a defensive driving program

To keep your premiums low, undergo a defensive driving training program. A certificate like this will reflect your careful stance on the road, thereby reducing your premiums marginally.

Compare quotes

Make sure not to settle with the first insurer you come across following the accident. Try to research the best policies and compare quotes from multiple insurers. This will help you choose the right policy to keep your premium affordable.