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Does a No-Fault Accident Affect Your Insurance Rates? What You Need to Know

A no-fault accident may affect your future insurance rates. Learn how claims impact premiums and what to expect after a no-fault incident.

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If you're in a car accident, your first thought will be about the safety of yourself and your passengers. But your second thought might be, "Will my insurance rates go up because of this?" Even when you're not at fault, it's possible your rates will go up. Even though no-fault accidents do not assign blame to you, insurance companies often still consider them when calculating your future premiums. As such, it's important to understand how the no-fault accident system works.

Understanding No-Fault Insurance Systems

No-fault insurance, sometimes known as personal injury protection insurance (PIP), may help cover the medical expenses and loss of income for you and your passengers after a covered accident, regardless of which driver is at fault.

There are 18 states that require no-fault insurance. In these states, no-fault insurance laws require that each driver's own insurance companies cover damages, regardless of who is at fault. Some state-specific no-fault insurance systems also require separate medical payments coverage.

How Does No-Fault Insurance Differ From Traditional Insurance?

The primary difference between no-fault insurance and other types of auto insurance is that no-fault policies cover damages regardless of who is found at fault. Provided the accident is covered by the terms of your policy, you and/or your passengers will receive payment for medical bills, income losses, and other related expenses, even if you were determined to be at fault.

Determining Fault in Accidents

Fault is important to both insurance providers and policyholders, especially in at-fault states.

The Role of Fault in Insurance

In insurance, fault is a legal term that determines who is responsible for an accident. Determining the fault driver is an important step in litigating any accident. For example, in some at-fault states, if a driver is found to be more than 50% at fault, they will lose the right to recover any damages lost. Even if a driver is less than 50% at-fault, the percentage of fault attributed to them influences how much compensation they may receive.

Impact of Fault on Insurance Rates

In at-fault states, being found the fault driver will result in your insurance provider covering the other driver's damages after car accident. This impacts your claims history and will result in higher insurance premiums down the line.

Factors Influencing Future Insurance Rates

Regardless of the causes of car accidents, you may see increases in premiums for a variety of reasons.

Prior Traffic Offenses and Claims History

Even in no-fault insurance systems, a history of insurance claims suggests more future claims. That is, at least, in the minds of insurance companies. Maintaining a clean driving record is one of the best ways to keep your insurance rates low. On the other hand, accidents, traffic violations, and making frequent claims are all ways to raise your auto insurance premiums. If you're a regular in police reports due to accidents and violations, your premiums will go up regardless of whether or not you are at fault.

Severity of the Accident

Remember, in no-fault states, your own insurance company has to pay for your vehicle damages and medical expenses. As such, more severe accidents typically result in higher payouts. When an insurance company has to pay out a significant claim, it will almost always raise your premiums because it identifies you as a more at-risk driver.

Accident Forgiveness Programs

Many insurance companies offer accident forgiveness programs. These programs are available in both at-fault and no-fault states. An accident forgiveness program is an add-on to your insurance policy that prevents rate increases after your first accident on the policy. Sometimes they're free, sometimes you'll have to pay accident forgiveness rates.

Limitations of Accident Forgiveness Programs

There are some key limitations of accident forgiveness programs, including:

  • They're not offered by every insurance company or permitted in every state.
  • They typically only apply to one accident per policy, not per driver on the policy.
  • Even if your accident is "forgiven" by your insurance company, it still stays on your driving record and is visible to other insurers.

Long-Term Effects on Insurance Premiums

Insurance premiums change over time, but accidents are one of the primary factors that keeps them high. Do no-fault accidents affect insurance in the future? Yes, unfortunately, they do.

How Accidents Impact Premiums Over Time

Any time you file a claim for an accident, it stays on your insurance record. Depending on the insurance company, it may stay on your record for three to five years. During this time, you can expect to pay higher premiums.

Accumulated Claims and Premiums

Even if you're determined not at-fault, any time you file a claim, it's on your record. The more loaded your claims history is, the higher premiums you'll pay. Sometimes, it's smarter to pay out of pocket to fix small damages yourself rather than accumulate more claims.

Manage Insurance Costs Post-Accident

If you're struggling with higher insurance premiums after an accident, there are a few steps you can take.

Regular Policy Reviews

It's a good idea to review your policy at least once a year, and any time you make a life change that affects your driving habits. If you're driving less because you're working from home or your last accident was five years ago, you may be able to get reduced rates.

Enhancing Creditworthiness

Your credit score is an important consideration for auto insurance policies. The better your score, the lower your premiums, so if you've paid down debts and built your credit, it's a good idea to review your auto policy.

Exploring Discounts and Bundling Options

Finally, most insurance companies offer discounts and bundling options. From safe driving discounts to auto and homeowners insurance bundles, there are many ways to save on insurance premiums. If you're experiencing rate increases after a no-fault accident, use EverQuote's comparison tools to compare competitor rates and gain a better understanding of your insurance policy.

FAQs

Will a non-fault claim affect my insurance?
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Even if you're determined to be not at fault in an accident, it can still affect your insurance rates. If you make a claim, it goes on your claims history, which insurers use to set your rates.
Does insurance go up if it's not your fault?
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Insurance doesn't always go up if an accident is not your fault. It depends on the insurance company's policies and whether or not you have accident forgiveness coverage. However, most of the time when you make a claim, it will raise your insurance rates.
How much does insurance increase after a claim?
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The amount insurance rates increase after a claim depends on the severity of the claim, the determination of fault, and the insurance company's policies.