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Car insurance companies consider multiple factors when determining your rates, including your driving record. Your history as a driver holds a lot of weight, as it helps insurers assess risk and better understand how likely you are to file a future claim. If you have a recent auto accident on your driving record, it's something that could translate to higher rates—especially if it's accompanied by moving violations, such as speeding tickets.
The silver lining is that an accident's impact on your premiums isn't permanent. Many insurance companies only consider the last three to five years of your driving record when calculating your rates, although the exact length of time can vary by state and insurance company.
To be clear, that doesn't necessarily mean that a previous accident will be removed from your driving record after a period of time—it's just to say that insurers typically won't factor it into your rates. In other words, an accident from six years ago might still be on your driving record, but it might not have a huge impact on your car insurance rates—assuming you've continued to demonstrate responsible driving since then.
Wondering how long an accident will stay on your insurance? Let's first unpack how it affects your insurance rates in the short term.
What Happens to Your Insurance Rates After an Accident?
Since your driving record influences your car insurance premiums, an accident could bump up your insurance costs. However, it doesn't mean that your rates will definitely skyrocket if you're involved in an accident. In some cases, they may not change at all if you weren't at fault or if it's your first accident. You're likely to see a rate hike if you've been involved in other accidents over the past few years. And, again, the same goes for moving violations.
Insurers look at the big picture when determining your risk profile and, in turn, your rates. In this way, accidents and citations can stack on top of each other to increase your premium. Your rates could also go up after an accident if the other driver doesn't have enough insurance to cover the damage. In this situation, you might have to utilize your own uninsured/underinsured motorist coverage, which could trigger a rate increase.
It's also helpful to think in terms of individual claims. A minor fender bender will likely result in a smaller claim when compared to a collision that causes serious damage or injuries. Let's say you get into an accident that's primarily your fault. If you file a claim with your insurance company that exceeds a specific amount, your premium will spike by a correlating percentage, according to the Insurance Information Institute. The correlation varies from insurer to insurer, and you can expect that rate hike to be there as long as your insurer considers the accident as a factor in your rate.
In some cases, an accident could result in your car being totaled, which is when the overall cost of repairs outweighs the value of the car. At that point, your insurer may provide a payout equivalent to your car's actual cash value. The value of a vehicle is typically determined by the vehicle's make and model, age, mileage and condition, among other factors, at the time of the accident. It's essentially a rough estimate of how much the car could have reasonably sold for had it not been totaled.
What Else Affects Your Auto Insurance Rates?
Your driving record isn't the only factor that affects your auto insurance rates. Every state has its own minimum coverage requirements, and rates tend to vary from state to state. Things like your gender, age and marital status and how much you drive can all come into play as well. And if you opt for a pricier car that's more expensive to repair or more likely to be stolen, you could end up paying a higher premium. Moreover, insuring a car that's leased or financed tends to be more expensive as your lessor or lender will likely require you to purchase additional coverage.
A policy that has a higher deductible, which is the amount you'll pay in out-of-pocket costs before your policy coverage kicks in, generally comes with lower premiums, and vice versa. Just bear in mind that a high deductible could be costly in the event that you have to file a claim.
In most states, car insurance companies can also consider your credit when determining your rates by using a credit-based insurance score. Like your consumer credit scores, credit-based insurance scores are based on things like your debt payment history and account balances. If you have a high credit score, it's likely you also have a high credit-based insurance score. Having a strong score can unlock lower rates because it suggests that you may be less likely to file a claim in the future.
How to Lower Your Car Insurance Rates After an Accident
Besides being patient and waiting for the accident to no longer be considered, there are ways you may be able to offset an increase in your car insurance rates following an accident. Improving your credit is a great place to start: Even simple moves, like making timely debt payments and reducing your outstanding credit card balances, could have a big impact if your state allows the use of credit scores in insurance pricing. Review your credit by checking your free credit report and scores from Experian.
Another way to bring down high premiums is to explore discounts. Your insurer may offer discounts for students, military service members and seniors. You may also be able to shave your costs by bundling your auto coverage with your renters or homeowners insurance policies. Some insurers offer discounts to policyholders who take a defensive driving course or demonstrate safe driving for a certain period of time. No matter what discounts your current auto insurer may offer, be sure to shop around and compare quotes with other carriers to find the best rate.
If possible, it could help to reduce the number of miles you drive annually. Your average mileage plays a significant role in determining your risk and, by extension, your insurance rates. If you've started working from home or got a new job with a shorter commute, be sure to alert your insurance company so your premium can take your new driving habits into account.
The Bottom Line
Whether it's an accident, a moving violation or a traffic citation, a blemish on your driving record can spark an increase in your car insurance premiums. These types of rate increases typically last anywhere from three to five years, assuming you don't incur any new infractions. Improving your credit in the meantime could help reduce your premiums—and strengthen your overall financial health in the process.