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How Will Accidents Affect my Rates?
It’s a fact of life that accidents happen. No matter how safe YOU may be driving, you can’t always control what’s going on around you. However, just being in a car accident doesn’t have to mean your premium will go up. Most insurance carriers will take the circumstances of the accident into consideration. Some of the factors they’ll look at include the cause of the accident (often times your carrier won’t increase your premium if you are not found to be at fault); severity of the accident (did the cost of the damage to your car exceed your car’s value?); and your claim history.
If you experience your first accident and you are not found at fault, there’s a pretty good chance your premium won’t go up or will only increase nominally. But what if the accident is your fault? It happens! You look down for one second to change your CD, and traffic conditions change. If you are found to be at fault, your rate rise will depend on several different factors, such as state law and your individual insurance company’s rate plan. More seriously, if alcohol or drugs were involved in your accident an increase in your policy rate could be the least of your worries. In general though, you can usually expect your rates to increase anywhere from 20%-40% per six months of coverage, according to most consumer watchdog sites. If you lose some of the discounts you were getting – such as good driver or claim free discounts – your premiums could increase more.
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So once you’ve been in an accident, are you doomed to pay higher rates forever? The answer to that varies from state to state. Some state insurance boards allow insurance companies to charge higher premiums for an accident for three years from the first day they started charging for it. To find out how long you’ll be paying higher premiums, check with your local state insurance board.
It’s important to remember that an auto insurance policy is actually a package of different kinds of coverage. Fifty U.S. states require that you to purchase at least a minimum amount coverage called liability coverage, which is less expensive up front, but won’t protect you from potential lawsuits or expensive car repair bills – both of which are factors you should take into consideration when choosing how much coverage is right for you.
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