Every driver involved in a car accident – especially his or her first one – has the same thought process: I’m a good driver! I shouldn’t be penalized for one mistake. Whether you’re an incredibly safe driver having a bad day or an accident-prone distracted driver, accidents happen. As a result, there’s a good chance your rates will rise following an accident, especially if you’re the one at fault.

It shouldn’t be a surprise to insured drivers that accidents have a big influence on their auto insurance rates. While there is no exact number of how the rates of people of certain demographics – based on age, gender and marital status – will increase, there are quite a few factors that influence how much these rates will hike. If you want a quick glance at how much your car insurance will increase after an accident, take a look at a previous post.

The first thing you need to be cautious of is what you do following a car accident; admitting fault or making a claim too hastily are two big potential mistakes you shouldn’t make. If you’re the at-fault driver, there’s a big chance your insurance premiums will increase by the time your next pay period comes along. Even if you’re not at fault, your premiums may still rise. What are some factors that are taken into account when insurance companies alter rates following collisions?

 

Do the Math

The way many companies determine how your rates will increase is based on the percentage of fault each driver is assigned following the accident. Most of the time, accidents that result in high premium increases are ones in which a driver is considered to be more than 50% at fault. For example, if you have to hard break and the car behind you rear-ends you because the driver is texting, you may be 30% at fault, while the other driver is 70% at fault. Deciding who is at fault after an accident is never easy, as the only witnesses of an accident are often the two drivers.

 

Repeat Offender

You know the expression “Fool me once, shame on you. Fool me twice, shame on me.” You can apply this saying to the way in which your rates will raise following multiple incidents. The first accident you get into may not make a huge difference on your rates, but the second time will result in much bigger consequences. The number of accidents you get into – particularly within a 3-year time period – determines how high your rates will be.

 

Forgiving, Not Forgetting

Some car insurance companies don’t financially dock a driver following his or her first accident. Allstate offers accident forgiveness, which is put into place the day you enroll in their insurance policy. This means your rates won’t increase after an accident. You might even receive protection, even if you’re at fault. While some companies offer accident forgiveness for free through their policy, others require an add-on. These accidents aren’t pushed under the rug, however; accidents tend to stay on your record for 3-5 years.

 

Point System

A point system is the way some companies – including Geico – quantify policyholders’ accidents. Like in golf, you want to keep your points as low as possible with this sort of system. Geico gives one point to drivers for their first accidents. Following a driver’s second, third, or subsequent accident, he or she will receive two points. Any conviction – such as driving while intoxicated or texting while driving – results in additional points. The more points a driver has, the higher his or her premiums will be.

 

A car accident isn’t the end of the world. It may cause your premiums to rise, but as long as you don’t let it happen frequently, it shouldn’t make too much of an impact on your finances. Instead of worrying, work to improve your driving habits; keep your eyes on the road, hands on the wheel and do not use your phone while driving or get into the driver’s seat while under the influence of any substances. If you’re the at-fault driver, use this mistake as a lesson. Practice safe driving and track your habits if you want to go from accident-prone to accident-free.