There were 10.2 million car accidents in 2008, according to the U.S. Census Bureau. If you were involved in one of those accidents, chances are your insurance company covered certain damages. Car insurance provides peace of mind to drivers and passengers alike, because the cost to repair damage to a car can range from a few hundred dollars to a few thousand dollars. Some insurance also covers medical damages. Insurance isn't free, however, and multiple accidents may cause your yearly premium to more than double.
If you cause an accident, your insurance rate will generally increase. It's impossible to estimate how much your premium will go up, because the insurance takes into account your prior driving record. If you had a clean driving record for the past two or three years before an accident that you caused, expect your rates to go up anywhere from 5 to 35 percent. In 2008. for example, AAA motorist insurance rates increased 30 percent for people who caused one accident, while State Farm was more lenient at 10 percent, according to Insure.com.
Your rates will almost never go up if you were involved in accident you didn't cause, unless you are involved in several accidents. However, Carinsurancerates.com states that insurance companies may increase your premium after a no-fault accident if you have had citations or were involved in minor accidents in the past year. Some insurance companies offer accident forgiveness, which means your rates do not go up after one accident.
Types of Insurance
The type of coverage your purchase determines who and what is covered in the case of an accident. All states with the exception of New Hampshire required motorists to purchase at least liability insurance as late as June 2010. Liability insurance covers damage to other cars or people, but it does not cover damages to your vehicle or injuries to you. Conversely, collision covers damages to your car in an accident and those of other cars, while comprehensive covers your car in an accident and unforeseen damages, such as theft or a falling tree. If you opt to finance your vehicle, expect to pay for comprehensive coverage, per the rules of almost all lenders. Other types of coverage exist too, such as personal injury protection, but they are generally not mandatory.
Not Having Insurance
Simply driving without insurance is enough for a state to temporarily revoke your license; it doesn't matter if you're involved in an accident or not. In addition to the possibility of the state suspending your license, you will also incur fines of at least $100. If you are involved in an accident, the other driver may sue you for damages. If you lose your license due to a lack of car insurance, you may also face jail time if you continue to drive and are caught.
Car insurance varies dramatically from person to person and car to car. If you're young, you're likely going to pay more for an insurance policy than someone who is older and more experienced behind the wheel. If you have a clean driving record, insurance companies will reward you with a lower rate. Drive a brand new sports car, and it really doesn't matter if you have a clean driving record or not; fast, sporty cars pose a higher risk than other cars. The average yearly premium for a car was $1,544 as of March 2011, according to Insure.com. You can use that figure as a rough estimate of what you'll pay, but you may pay hundreds more or less depending on the type of car you drive and your driving record.
- U.S. Census Bureau: Transportation: Motor Vehicle Accidents and Fatalities
- Insure.com: How Much Can Your Car Insurance Rates Go up After One Accident?; Dec. 10, 2009
- CarInsuranceRates.com: Premiums Increase After At-Fault and No-Fault Accident
- CarInsurance.com: Do All States Require Car Insurance?
- CarInsurance.com: Insurance Coverage Definitions
- CarInsurance.com: Penalties for Driving Without Car Insurance
- Photo Credit wrecked car image by hazel proudlove from Fotolia.com
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