You are concentrating on the road while driving your car, ready to go home, when out of nowhere, another car rams the back of your vehicle. Neither of you have suffered any injuries; however, your car’s rear is severely damaged. Luckily, you are not worried, as you have reliable insurance and you are certain the accident was not your fault.
Sadly, one of the worst experiences that you may encounter as a driver is getting into a car accident. The fear during the accident is incomparable. All the settlements, trips to the mechanics and the doctor, and the insurance rates hike make the experience even worse.
Insurance companies often pay for damages incurred during a car accident, especially if it is not your fault. However, even in instances when you’ve proven that the car accident was not your fault, you can end up paying more. Because of the accident, insurance rates have a tendency to go up, even if you are not at fault.
Why do insurance rates go up after automobile accidents? Even if it is not your fault, insurance companies will impose increases after the auto accident. It may seem unfair, but there is a reason behind it.
Factors that Affect Car Insurance Costs
When purchasing a vehicle, buyers must assess whether they are purchasing the right one or not. The car is not the only thing you are purchasing that is expensive. It also requires other costs such as insurance.
Based on your chosen vehicle, affect the amount you have to pay for insurance:
- The year your car was made affects the amount you have to pay for car insurance. There are instances where insurance providers give discounts to owners who just purchased brand new cars.
- Different car models include hatchback, sedan, multi-purpose vehicle (MPV), sports utility vehicle (SUV), convertible, coupe and more. The car’s model type is also a factor that affects the price of your car insurance. The fancier or more extravagant the car, there is a tendency that the car insurance premium is higher.
- Coverage also affects the cost of insurance premiums. The more coverage or protection you want for your car, the insurance gets even pricier. It is advisable to get the coverage that you really need, especially if you are on a tight budget.
- The number of vehicles you wish to insure can also affect the overall coverage cost of your car insurance. Some insurance companies give discounts for multiple cars insured.
Insurance and Risks
Insurance companies are very sensitive when it comes to risks. Insurance rates are based on the level of risk involved. If they perceive that something poses a high risk for them, will also apply. However, if they assess that low risks are involved, their prices might be lower. In the case of automobile accidents, insurance companies pay for car repairs, damages and, if any, lawsuit costs. Therefore, it is a high risk for the company.
Other Price Hike Factors
The driver is also a big factor when insurance prices increase. Companies may also assess the drivers before offering a premium. Some factors include:
Driver’s Age – is a big factor when it comes insurance rate changes. If a driver is a teenager, insurance prices are high. As the driver grows older until the age of 30, the insurance premium is at its lowest possible price. As the driver grows older than age 30, the insurance cost gradually increases.
Driving Record – Driving history also plays a great part in the increase of insurance rates. When insurance companies see that your driving history shows various accidents and road mishaps, there is a tendency that your insurance cost will be high.
Credit Score – Most insurance company review drivers’ credit score to gauge if the driver has the capability of paying the premiums. It is important to take care of your credit score; some companies offer better rates for those who have outstanding credit scores.
A Hefty Price Hike
Based on a study by , drivers who made their claims from their insurance companies noticed that there was an average price hike of 44.1% in their premiums. Drivers who were not involved in any form of unsafe driving surprisingly made these claims. From 2014 up to 2017, a happened to drivers who filed two claims that were more than $2,000.
Given this data, drivers as well as car insurance policy holders should review their policies in order to avoid being surprised when a car accident occurs.
What Should You Do?
When you notice a significant increase in the insurance premium, it is best to inform the insurance company that you have questions in order for them to explain their reasons clearly.
Vicki Haskett is a law writing enthusiast who’s had over 25 years of experience in her field. She enjoys sharing her experiences with those who want to learn more about the world. In her spare time she spends quality time with her family and friends.