Inile Insurance

When you get into an accident, you are subject to an increase in your base car insurance premium. Whether or not you are surcharged will depend upon your state and your insurance company.

You may find that your rates rise even when you didn't cause the accident. Let's take a look at why car insurance rates can increase after an accident.

When we buy car insurance, we help protect ourselves from the financial risks of suffering an injury or fatality, or of our car being damaged from an accident.

Insurance companies are risk-averse. When you get into an accident, regardless of fault, you may be viewed as a higher risk. To offset this, the insurance company might elect to impose a surcharge.

Incurring a rate increase due to an accident and the amount of the increase will vary by insurance company.

Many states have insurance regulations and legislation that prohibit an insurance company from raising your base premium IF:

• You are not at fault in a car crash.
• If you file a claim under your comprehensive coverage.

Examples of states that limit surcharges are:

• Massachusetts. The state ONLY allows surcharges for an accident IF:
• You are more than 50 percent at fault and the claim amount is over $500(after your deductible).
•  Example: An accident with $800 filed as the claim cannot result in a surcharge if your deductible is $500, because the claim only costs the insurance company $300.
• New York State. In NYS, insurance companies CANNOT raise your base premium IF:
• You filed your claim under your comprehensive coverage.
• The total damage from the crash is under $2,000 and no one was injured or killed.
• NOTE: If you are in 2 accidents or more — even if the total damage for each was under $2,000 — your auto insurance company can issue you a surcharge.

Other states have their own laws governing surcharges and rate increases. Check with your car insurance agent to learn more.

While reason says you shouldn't have to pay for an accident you didn't cause, in some cases you might still see a surcharge when you weren't at fault. The scenarios below may help explain why this happens.

Scenario 1:

You are driving down a highway and flying debris that falls off a truck speeding past you hits and damages your car.

Your insurance company may consider it an unavoidable flying object, cover it under your comprehensive coverage, and choose not to issue a surcharge. However, if you ran over the debris and damaged your car, collision coverage will pay for the damages, and this may subject you to a surcharge.

If the truck driver realizes he caused damage to your car, does the right thing, and pulls over to the side of the road, you can file a claim under his liability insurance and avoid a rate increase.

Scenario 2:

You get hit by a driver, only to find out that his insurance is not current.

Claims filed under your uninsured or underinsured motorist coverage usually results in a surcharge that applies to your premium, even though you did not cause the loss. When your insurance company has to pay you, there's a high likelihood that they'll pass some costs down to you by imposing a surcharge.

Some states mandate that insurance companies can't give you a surcharge in your first accident with an uninsured driver (when you are not at fault); however, most states do not ban companies from imposing a surcharge after a second at-fault accident within your policy period.

Scenario 3:

You are involved in an accident and are deemed not at fault.

Some car insurance companies will increase your insurance premium regardless of fault. As someone who didn't cause the accident, this can feel unfair.

However, some insurance companies have statistically concluded, based on their customers' driving behavior, that if a driver gets into just one accident they are more likely to get into another accident of equal or greater severity.

It's important to know the details of your car insurance policy. When you apply for car insurance, ask which situations will lead to increased rates.

If you are handed a surcharge, discuss your options with your insurance company. In some cases, you may be able to appeal an at-fault finding and reverse your rate increase. If your surcharge is unavoidable, you may be able to keep your premium low by increasing your deductibles.

If your premium becomes too high to handle, you can comparison-shop to see if you can find a better rate with another provider as all companies rate drivers differently.