A car insurance provider has the right to raise your insurance premium after you've been in a car accident and make a claim. You may not be aware that this rate increase is decided by a formula that each insurance provider has made, and your premium increase is automatically decided by a computer. Drivers that get into accidents are a higher risk, so this should make some sense to you. That's why it is important to understand what triggers rate increases and how to minimize your new premium increase.
What Triggers a Rate Increase
An accident will not always lead to a guaranteed rate increase, since there are factors regarding the nature of the accident that play into the actual price you pay. For drivers that have gone years without getting into a car accident, a minor fender bender could have very little or no impact on a car insurance policy.
Fault also plays a key role in any potential increase, but it really depends on what state you live in. For instance, Michigan is a no-fault insurance state, and your insurance provider will always be the one paying for your car repairs. It doesn't matter who is at fault, because the state laws dictate that each driver is responsible for the damage to their own car. You have the option to sue the driver responsible to recover your deductible expenses, but you could still have a premium increase as a result of making a claim. For other states, fault requires that you have found the person responsible for damaging your car. If someone hits your car in a parking lot, you must know who did it or else you'll need to make a claim with your own insurance provider to fix the damage.
What Minimizes a Rate Increases
You can minimize how much your insurance rate increases by letting your auto insurance provider know about an accident as soon as possible. If they discover the accident because the other driver is making a claim against your insurance this may not sit well if your insurance provider.
Some car insurance providers offer accident forgiveness. It is assumed that people will get into an accident at some point, and the price increase is already factored into everyone's premium due to this. You can also make changes to your car insurance policy to lower how much you pay. Making the deductible higher or getting rid of collision coverage are two ways to lower your premium.
Schedule an appointment with a local auto agent to learn more. Check out Angel Auto Insurance.