Besides inflicting immediate damage to your vehicle and causing bodily injuries, car accidents can also haunt you financially. In case you are at fault, it can lead to increments in your insurance premiums. Eventually, you can end up shelling out a high premium for several consecutive years.
Preventing accidents is the best strategy to keep the premiums manageable. However, drivers who already have accidents under their names should be aware of certain tactics that can reduce the impact.
In case you are a new driver or have concerns over hiked insurance premiums after being involved in an accident, it’s logical to consult insurance specialists like Surex. The professionals will help you obtain the best car insurance quotes in Ottawa to make your expenses manageable.
What Impact Do Accidents Have On Insurance Rates?
Depending on the risk factor, you might see insurance rates increasing significantly if you are at fault during an accident. However, several factors decide the rate by which the premiums would increase. Here are certain factors that determine the new rate of premiums.
- Whether or not you are at fault during the accident
- Your past record of driving
- The accident claim amount
How Do Insurance Companies Calculate The New Premium?
You would not like to fork out higher insurance premiums for a few accidents where you were at fault. In some places like Ontario, the Insurance Act does not allow the insurers to increase the premiums in case the collisions are minor, no injuries occur, and the claim can be settled under $2,000.
However, this limit may exceed in some accidents. Also, the norms may vary among different provinces. In these cases, the insurance companies allocate the drivers with a certain level of fault, ranging between 0% to 100%. Any allocation exceeding 25% may lead to a hike in premium. Therefore, the increased rate largely depends on the extent to which the driver was at fault.
How Much Can My Insurance Rate Increase After An Accident?
The rates may remain the same if you are not at fault. If the fault is yours, the insurer may not make any change in the premiums, in case you have not filed any claim in recent years, and the claim amount is minimal. If you have an accident forgiveness policy, the premium would remain unchanged.
Things can be different if you do not have an accident forgiveness rider, as the insurance rates rise. When the premiums shoot up, the new values would come into effect when you renew the policy or change the same. This increment would be considered as a ‘surcharge’. On subsequent renewals, this surcharge would keep decreasing each year. After a few renewals, you would again be paying the original insurance rates.
However, if you are at fault in several accidents within a span of three years, the surcharges would add up to make the policy too expensive. To give you an idea, the premium may increase by 50% to 200%. Depending on whether you have an accident forgiveness policy or not, the percentage of a surcharge can vary.
Accident Forgiveness Programs Can Come To Your Rescue
In case your insurer has enrolled you for an accident forgiveness program, the surcharges might be waived. The requirements for qualifying for one of these programs vary from one insurer to the other. Long-term policyholders with impressive track records of driving can obtain these policies for free.
However, if your insurer has not included an accident forgiveness policy in your package, you can purchase one by making an additional payment. Therefore, if you are a new driver, or have just purchased a policy without any impressive driving record, you can purchase it as a rider.
How Does Accident Forgiveness Work?
Although many drivers believe that accident forgiveness policies can help them from shelling out an additional premium, you need to consider three aspects.
- Accident forgiveness is not a part of general car insurance policies and works as an add-on. Therefore, you need to make an additional payment to prevent the car premium from rising.
- This type of rider can prevent your premiums from rising due to a specific or single accident. In case you are charged with careless driving or any other offence, these riders won’t be applicable.
- Not everyone can qualify for accident forgiveness. Therefore, you need to apply for this policy at the time of signing up for your car insurance, or during the renewal period. Your insurer would scrutinize your driving record and decide whether you can obtain one.
Therefore, you can benefit from accident forgiveness policies only if you have a clean driving record. Besides, the insurers would also consider the duration for which your record remains clean. For instance, if a driver has a clean record for 6 years, he would have better odds for qualifying, when compared to someone who recorded an accident 5 years ago. In general, accidents can remain on your record for 6 years, beyond which the record is considered to be clean.
How To Lower Your Premium After An Accident
As a car owner, it’s natural to inquire how you can lower your insurance premium after an accident. Even if you are not eligible for accident forgiveness policies, you have other ways to lower the premiums.
Improve Credit Score
In certain provinces, the credit score goes a long way in deciding the insurance rates. When you pay the debts and stay within budget, you can enjoy lower premiums.
You would have to shell out lower premiums, in case you pay a higher deductible. However, get a transparent idea about the knowledge before proceeding.
Get Discounted Rates
Insurance companies often provide policies at discounted rates. You may shop around or consult an insurance specialist for the best deals.
Well, accidents are unforeseen incidents that may not even spare drivers with a clean record. In case you require professional guidance after an accident to reduce the insurance premiums, reach out to one of the established insurance specialists. Besides, you may also invest in an accident forgiveness policy after consulting the experts.