Does Insurance Go Up if I'm Not at Fault in an Accident?
Even though auto insurance is required in nearly every state, and is always required in the event of an accident, many people don't understand how the policy works. Among other things, you may wonder if your premium automatically increases after an accident, regardless of your level of fault. Every state sets its own rules about auto insurance, so potential premium increases depend on a number of factors.
Other People Are Reading
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Surcharge Rationale
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Auto insurance premium surcharges are not your company's way of punishing you for doing something wrong. Insurance is about managing risk, so your premium corresponds to the amount of risk you pose to your insurance company. Statistically, people with moving violations are more likely to get into accidents, which cost the insurer money. Similarly, if you are determined to be at fault for an accident, your insurer has to pay for the damage you cause, and you are statistically more likely to cause additional damage in the future.
Negligence
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Following insurers' surcharge rationale, you would not expect your premiums to increase if you were involved in an accident that is not your fault. Since you did nothing to cause the accident, there is no judgment on your driving abilities that causes your level of risk to the insurer to increase. Be wary of comparative negligence, however. Some states permit insurers to assign percentages of responsibility to everyone in an accident, so just because you are not 100 percent responsible for a loss doesn't mean you are fault free. You may see a corresponding premium increase if you are partially at fault.
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Uninsured Motorist
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In some cases, you may see a premium increase even if you are not at fault. Insurers raise rates, in part, based on the dollar amount they pay for your claims. If you are not at fault, theoretically the net cost to your insurer is nothing: You are able to collect in full from the negligent party's insurance, or your insurer can bill the negligent company for reimbursement of the money it spent on your behalf. However, if the negligent party has no insurance, you can claim your damages against your uninsured motorist coverage. This means your insurer pays the claim for you and has no one to recover its money from. In this instance, your rates may increase.
State Law
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Much depends on the insurance laws in your state. In California, you must be found legally negligent for a loss in order for your rates to increase afterward. In states where this is not expressly stated in the law, you are subject to your insurer's policies regarding premium increases. Some states do not permit premium increases after an uninsured motorist loss. You may see surcharges in one state but not another. Your insurance agent may be able to help you understand your state's laws better.
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References
- Photo Credit Jeep and car after the road accident. image by Dragan Trifunovic from Fotolia.com
