How Much Will a Minor Accident Affect My Auto Insurance Rate?
There's not widespread agreement on the right answer to the question of how much your auto insurance rate increases after a minor accident. Some sources say flatly that after a fender bender with no injuries where you're not at fault, it won't go up at all; others are less optimistic. The answer also depends on what you mean by "minor," which state you live in, which carrier handles your auto insurance and even which car you drive. Accounting for these variables, the general consensus is that failing appropriate responsive measures such as "accident forgiveness," which is not available in all states, your insurance is likely to go up more than you'd like.
If you don't have the "accident forgiveness" option that may keep your auto insurance premiums from increasing, it's almost a wild-card guess to determine how much more you'll pay for insurance because of so many variables involved in this equation.
Evaluating The Worst Case
Research has shown that single chargeable accident with a $2,000 damage claim can increase the average auto insurance rate by 41 percent. If you haven't had occasion to take your car to a body shop in recent years, $2,000 might signify something more than "minor." But, in fact, a single sideswipe that only grazes a couple of body panels can run even higher.
Similar research has concluded, however, that if the accident wasn't your fault, "payments shouldn't be affected." Other insurance sites aren't so sure. A DMV.org survey concluded that, "You may find that your rates rise even when you didn't cause the accident."
One thing agreed upon by both of these sites and several others: If you have an accident with certain characteristics, your insurance rate could increase significantly, sometimes by more than 100 percent.
Examples include: you have a second accident in a year (regardless of whether both accidents were minor and neither was charged); you have a chargeable accident, whether you caused the accident or were a minor contributor; your accident results in bodily injury to someone; or your driving history shows a history of accidents or traffic tickets, even if the accidents are considered minor.
There's a Downside
Legislating against high rate increases after a minor or nonchargeable accident can be an act of pushing on a string. Insurance companies operating in states like New York with regulations prohibiting rate-rises for minor or nonchargeable accidents have maintained profitability by raising auto insurance rates in those states; generally, far above the national average.
Similarly, companies operating in states with more stringent auto insurance regulation – California, for example – raise rates in specific _unregulate_d areas far above the national average. California doesn't regulate rates for chargeable accidents and although the national average increase after a driver's first chargeable accident is around 41 percent, in California the increase is 92 percent.
Other Factors Influencing Rate Increases
If you drive an expensive or exotic car, not only will your rates be higher generally, they may increase more than the national average after even a minor, nonchargeable accident.
While some companies will give you a pass on your first accident – Geico, for example, has a program to achieve that at no additional cost – other companies hit you pretty hard. State Farm Insurance increases your rate by a relatively modest 8.5 percent after a single accident, but Progressive Insurance raises your rate by 49 percent.
I am a retired Registered Investment Advisor with 12 years experience as head of an investment management firm. I also have a Ph.D. in English and have written more than 4,000 articles for regional and national publications.