How Long Does It Take for an Accident to Impact Your Rate?

Everyone knows that an accident will raise your car insurance rates. Most people also know that those rates will go up even for accidents in which you were not at fault. What the average policyholder doesn’t know, however, is when those higher rates will take effect. Do they start the moment your insurer finds out about the accident? Or will your insurer wait for your policy renewal date to hike up your auto insurance rates? Read on for the answers to these commonly asked questions.

Post-Accident Rate Increase

With most auto insurers, you can expect your car insurance rates to rise when your policy comes up for renewal. In other words, after the accident, you will continue paying your existing auto insurance rates until the policy expires. At that point, your insurer will adjust your rate to reflect the accident. Carriers usually renew auto insurance policies every six months to one year. Call your insurer if you are uncertain of your policy’s renewal date so you can financially prepare for the higher rates.

Fault Is Irrelevant

Remember that your car insurance rates will usually rise regardless of whether you were at fault in an accident. Insurers view any type of accident as raising your claims risk, which is why they charge more after you have one. With no-fault accidents, you are much more likely to have a car insurance rate increase after the accident if you also have recent moving violations or other accidents on your record.

Duration and Amount

In most states, car insurance companies can legally raise your auto insurance rates after an accident for three years. The three-year period begins when the company starts charging you the higher rates, not when you had the accident. Post-accident rate increases normally range from 20 to 40 percent per six months. Your carrier may also remove any car insurance discounts that were applied to your policy before the accident.

Exceptions

Some car insurance companies have accident-forgiveness programs that will overlook your first accident if you have an otherwise clean driving record. In that case, the first accident you have will not raise your auto insurance premiums. Likewise, certain auto insurers may be willing to forgive accidents for which you were not at fault if you have a good driving record free of accidents, tickets, and so on. Your rates would remain the same after an accident if that were the case.