Why Does a Car Accident Raise Your Insurance Rates Even if You Aren't at Fault?

Drivers who get into an at-fault car accident are seen as presenting a much greater risk to insurers. Because insurance companies price policies based on risk, it's a lot more expensive to buy insurance coverage following a collision that a driver was to blame for. Depending on the state where the policyholder lives, insurance costs could go up anywhere between 4% and 92% with most people seeing increases in around the 35% to 60% range.

But, what happens when an accident happens that the policyholder was not responsible for?

Even though the insurer of the at-fault driver should be responsible for paying the bills, the crash victim could still find themselves with higher car insurance premiums going forward. A 2021 survey found an average $67 premium increase following a collision a driver was not to blame for.

Here's why.

Insurance premiums still go up for a few simple reasons

There are a few possible reasons why insurance policy costs can increase for drivers involved in a collision caused by someone else:

• The policyholder may still need to make a claim. Sometimes, a victim of a car accident will still end up making a claim with their own insurance company even if someone else was to blame for the crash. This could happen in a hit-and-run accident, or if the driver who caused the accident had no insurance or too little coverage. When a policyholder must make a claim with their uninsured or underinsured motorist after a crash, this can result in an increase in their premiums since their insurer has had to pay out.
• Insurers may perceive an increased risk of future accidents. Since the policyholder has already been in a collision, the insurer may view their chances of becoming involved in a future crash to be higher. After all, it happened once and could occur again. The elevated risk of future crashes necessitates a rise in premium costs when a policy is renewed.
• An insurer could still incur added costs. Even if a policyholder doesn't make a claim with their insurer after a collision, the policyholder should still report the crash to their insurance company. And the insurer could incur costs as they respond to the claim and deal with the insurer of the other driver on their policyholder's behalf. Or there could be questions of fault that must be determined, which would involve additional expenses for the insurer.

In some states, insurers aren't allowed to raise premiums unless an accident causes a certain minimum amount of damage (as measured by the costs). But outside of those situations, a driver can expect almost any accident to raise their rates.

What to do to keep insurance costs down

It can be very frustrating to find insurance premiums going up after an accident -- especially one a driver wasn't at fault for. After all, it can seem very unfair to see more money going out of a checking account just because of becoming an accident victim.

The good news is, there are some options available. Drivers who purchase accident forgiveness insurance, for example, should not see their premiums rise following a collision. It's also a good idea to shop around for new coverage after a crash, as another insurer may charge less than the current company post-collision.

By exploring these options, drivers can help to reduce any added costs that could result from a crash occurring.