3 Ways Accidents Affect Your Car Insurance
How will your car insurance change after an accident?
Immediately following a car accident, most people face a cacophony of thoughts:
Is everyone alright?
What was the cause of this?
I need to call the police!
Do we need an ambulance?
I need to call my insurance agent!
All those thoughts – and many more – steamrolling their way through your brain like a freight train. Yet, far less frequently is much concern given to the question “how will my insurance change moving forward” until after the fact.
You’ll Face the Likelihood of Pricing Changes After a Car Accident
If we’re being honest with one another, when you think about your insurance after an accident, all you’re thinking about is how it will affect your prices moving forward. It depends.
A multitude of factors go into the pricing equation of a car insurance policy in Ohio – one of them being your past driving record. The fewer tickets or accidents in your record, the better off you’ll be.
Below are several questions to consider when forecasting how your rates will change:
Who is your current insurance provider?
What does your overall driving record look like?
Have you made any other claims recently?
What are your demographics?
Does your insurance policy offer accident forgiveness?
Who caused the accident?
After a car accident, you can probably expect an increase in your future insurance premiums. But depending on your current policy, you may not experience an immediate negative effect at all.
Car Accidents Can Make It Difficult to Switch Companies
You now know that your driving record is one of the contributing components in your car insurance pricing algorithm. Your record also plays a crucial role in determining overall eligibility by the insurance company.
Insurance companies tend to use a lookback period of between 3-5 years. Based on what they find in your motor vehicle record, they make a judgment to continue to the next round of qualifications for coverage or reject your application immediately.
Generally speaking, a ding here or there won’t have too big of an impact or disqualify you from getting insurance coverage. However when a larger number of hits show up during the analysis period, you may appear to be too high of a risk for consideration by the carrier. When that occurs, you’ll find it more difficult to get the same or better coverage with another insurance company.
Your Coverage Might Be Canceled Over the Car Accident
After an accident, your insurance carrier may review your eligibility to remain with them moving forward. If during the course of their evaluation, it is determined that a material change in risk has occurred from when you first purchased your policy, the insurance company may decide to cancel or non-renew your coverage.
What would cause your insurance carrier to take such drastic measures over one claim?
When purchasing insurance coverage, you are judged by the responses to the application’s questions, as well as your past, as we’ve discussed here. Your past record is brought in as an indicator of what the future may hold – though the correlation doesn’t always remain static, for better or worse.
There are a number of factors that may go into the decision to cancel or non-renew your insurance coverage.
Having been convicted of any of the following violations:
DUI conviction (especially if driving while impaired was the root cause of the accident)
Reckless driving
Multiple accidents within a limited amount of time
Insurance fraud
The reason you buy insurance is to help manage your risk. The insurance carrier who assumes that risk on your behalf must actively manage their own risk. The list above, while limited, provides a good indication of hazards which could lead to preventable losses to both yourself and your insurance company.
It’s safe to say, in general those who have motor vehicle report hits resembling that truncated list will not be offered coverage in the first place by most carriers.
Consider the Circumstances Like an Insurance Company
As we’ve discussed, there are a number of circumstances that come into play with how your car insurance will be affected after you’re involved in an accident. Think like an insurance company, and consider the following :
Fault – were you cited as being at fault for the accident, or was the other driver?
Cause – were you impaired or distracted while you were driving, or was the accident just that, an accident?
Time between accidents – have you been “accident prone” since you got your current insurance policy?
Severity – was this a minor “fender bender” or was it a 6-car pileup?
Legal assistance – your car insurance company has a duty to defend you in court for your liability should you be enjoined in a lawsuit. The added cost of defending can escalate the cost of the claim pretty quickly.
Spending just a few moments on these factors can help you understand where your insurance company is coming from when making the decisions related to your policy following an accident.
Stay Prepared
Without sounding like a cliche, the time to properly prepare for a car accident is before it ever happens. At the time of your loss, the value of your car insurance policy will be put on display. Will it live up to its promise and make you whole again, or will you end up covering unexpected expenses yourself?
Remember, price only matters in the absence of value. You can hunt down the cheapest car insurance policy in Ohio, only to find you don’t have coverage when you need it most – or you can discuss your options with an advisor who can help you address your risk and manage it correctly. That’s where your Ohio Insurance Guy comes in. If you have questions about your policy, send me an email or click the Get Started button to book a time directly on my calendar. I’m happy to help in any way I can!