“Tips to Lower Your Car Insurance Rates After an Accident”

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What Happens to Your Insurance Rates After an Accident?

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. It is best to compare auto insurance rates from different companies when you’re ready to switch car insurance carriers.

Wondering how long an accident will stay on your insurance? Let’s first unpack how it affects your car insurance rates in the short term.

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. You should find out the types of car insurance coverage your state requires, and which ones are optional to get the best car insurance rates. 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 lower high premiums for car insurance costs 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.

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