Car accidents are not only damaging to your vehicle and dos give you injuries but it can also have lasting financial effects. Sometimes, the insurance premiums might be increased and the increase might last for several years. Accidents can increase insurance premiums for up to nine. The increase in premium not only raises the insurance costs but multiple accidents can increase the financial burden as their premium increases compound. Therefore, the best way is to avoid the insurance claims and other issues is to avoid accidents. After the accident the car insurance rates might go up. Though the effect on the car insurance depends on a variety of factors. All the following may decide whether the accident shall have an impact on the car insurance or not. Few things that decide the impact are as follows:
Whose fault it is in the accident?
The past driving record of the policyholder
How much did the accident claim amount to?
If the policyholder is not at fault, the insurance rates may be unchanged. If the policyholder is at fault, the premiums might still not go up and remain the same if the policyholder does not file an insurance claim or the amount of the claim is relatively minimal. In the situation of increase in the premium, the increase usually doesn’t go into effect until the policy is renewed or the policyholder changes the policy. When there is an increase in the premium, it is generally a percent of the current premium and is referred as ‘surcharge’. The amount of surcharge might decrease slightly with each policy renewal, until it no longer has an impact on the car insurance rates. The policyholder must take care that he is not into frequent accidents within three years else the associated premium surcharges will likely stack on each other and it shall make the insurance expensive.
For example, premiums for car insurance in Canada are based partly on the driving record of the policyholder and any change in the driving record can have an impact on the insurance rates. Though insurance companies do not have complete access to your driving record but they can pull records of your recent driving history which can go back to last three years and it will usually show tickets, accidents, claims, convictions and completed driver’s education courses. If they come across any such events or a car accident, there might be an increase in the premium which might end up to three years.
One must not lose sleep because of the fact that his car insurance premium might go up but the relief is that the rates go higher only if it is your fault. Whether or not you are at fault contact your insurance company in case of accidents. If there is no fault of yours in the accident, then the claim for the accident shall be dealt by the person’s company whose fault it was. But one should understand the simple thing that the best way to avoid hike in premium is to drive safely, that’s the best and simple rule. One should also know that many insurance companies do offer safe driver discounts. One must keep a check on it with his agent if he qualifies for that. It is important that the thought of the hike in premium should not threaten or abstain a person from filing a claim when it is needed. However, it should keep you away from making unnecessary claims. If you meet a minor accident and there’s no damage to your or other’s vehicle or the damage can be handled by you alone, it is better to pay from your own pocket rather than going to the insurance company. The main point of insurance is to protect you from financial disasters, so use it smartly and only if required. In addition to the safe driver discounts, many companies also offer accident forgiveness. These offers are the result of your loyalty to the company and the thus earned rewards can save you from the hike in premium. These offers are usually available to safe drivers who do not have a history of accidents and violations. In few cases, if the policyholder goes years without violation or accidents, he can get a cut in his rates. Of course, the offers varies from company to company.