Why Does My Auto Insurance Premium go Up If I Have an Accident or Get a Ticket?

Posted on Apr 09, 2015

Bad news: Insurance companies will most likely raise your rates if you have an accident.

Good news: They often don’t raise it if you get a ticket.

Here’s a look at how insurance companies decide if your rates will get bumped.

Rates and an Accident

Car insurance rates don’t automatically go up when you get into an auto accident. If you have a good driving record, a minor fender bender isn’t going to affect your premiums. And if you aren’t the one who caused the accident, it is very likely your rates will stay the same.

But often rates do go up. If you are in a major accident and you were the cause, count on higher auto insurance rates. According to a study reported by CBS News, rates go up an average of 41 percent.

The higher rates come in two forms:

  • Your driving record is one of the major factors considered when it comes to setting rates. If you cause an accident, it affects your driving record, which in turn affects your rates.
  • You can lose your safe driving discount, which will cause the amount you pay to go up

How long your rates will stay up depends on the state you live in and the process that your insurance company follows. The company uses two main factors for deciding how long your will have to pay a higher rate:

  • How severe the accident was.
  • How much the damages cost.

The surcharge will decrease slowly, a little bit each year. In most states, you don’t have another accident, it will decrease to zero after three years.

Rates and a Ticket

If you get caught for a minor moving violation, you probably won’t pay more if you have a good driving record and seldom get tickets. According to a study reported by Daily Finance, just 31 percent of U.S. drivers had to pay higher rates when they got a ticket. And for most of them, the amount of the premium increase was under $100 for the year.

The study also showed that drivers between 18 and 29 were the most likely to have to pay an increase. For the age group 30 to 49, 32 percent paid more; for those over 50, just 15 percent paid more.

The type of violation had a lot to do with whether a higher premium resulted. If you get caught in a minor violation like going 5 mph over the posted speed, your rates may go up by five to 10 percent..

But if it is a more serious violation, you increase your chances. These include:

  • Going more than 30 mph over the speed limit.
  • Failing to stop.
  • Passing illegally.
  • Tailgating.

How to Avoid Increases

The best way to reduce your chances of a rate increase is to avoid driving recklessly and getting involved in an accident. If you get one ticket, be extra careful to not get a second one. This puts up flags on your driving record.

You can mitigate an accident or moving violation with these actions:

  • Take a traffic safety course.
  • Keep up to date with your registrations and inspections.

You also get some relief from forgiveness rules. Often an insurance company will forgive minor moving violations if you have had a clear record up to that point.

Some states mandate forgiveness. For example, in New Jersey, an insurer can’t raise rates for a first-time two-point speeding ticket.

In addition, ask your New Jersey insurance agent if they offer discounts for bundling insurance and loyalty.

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