A car accident can be stressful enough without worrying about how it might affect your insurance premiums. Unfortunately, an accident can often lead to higher insurance rates, whether or not you were at fault.

What’s the reason behind this? Insurance companies view drivers involved in accidents as being at higher risk, regardless of who was at fault. In severe cases, especially those involving DUIs or multiple at-fault accidents, insurers may even cancel your policy altogether.

Understanding how and why your rates might increase — and how to minimize the impact — can help you take the appropriate action.

How an accident impacts your insurance premium

What rate increase can you expect after an accident?

One of the most immediate effects of a car accident is a potential increase in your insurance premium. However, the exact increase can vary based on several factors:

• An at-fault vs. no-fault accident: If you're at fault, expect a rate increase — typically between 40% to 50%. Some insurers may raise your premium by around 10% even if you're not at fault.
• The accident's severity: Accidents involving injuries or significant property damage result in higher rate increases than minor fender benders.
• The accident location: Where you live can significantly impact how much your rates increase. For example, in California, rates can nearly double after an accident, while in Pennsylvania, the increase might only be around 23%.

How long will an accident negatively affect you?

You’ll typically have to contend with an accident on your insurance record for three to five years, depending on the severity of the incident and state regulations. Some examples:

• California: Accidents usually impact your rates for three years.
• New York: Accidents can remain on your record for four years.
• Florida and Texas: Severe accidents may stay on your record for up to five years or more.

Serious violations, such as DUIs or reckless driving, could follow you around for up to 10 years.

How to reduce your insurance rates after an accident

If your premium goes up after an accident, you have options. There are several strategies you can use to lower your insurance rates:

1. Take advantage of accident forgiveness

Want to prevent your rates from increasing after your first at-fault accident? Sign up for your insurer’s accident forgiveness program if one is available. Companies reserve these programs for those who’ve maintained a clean driving record for a specified number of years.

2. Adjust your policy

There are three easy ways to make your policy more affordable: increase your deductible, adjust your coverage limits, or drop optional coverage (if it’s safe to do so).

3. Look for ways to offset a rate increase

Many insurance providers offer multiple discounts, such as:

• Defensive driving course discounts: Successfully completing a course can lower your rates and improve your driving skills.
• Multi-policy or multi-car discounts: Bundle home and auto policies or insure multiple vehicles through the same company.
• Low-mileage discounts: If you drive less than 7,500 miles/year, let your insurer know.
• Student discounts: A student on your policy must receive good grades, complete driver's education, or both
• Vehicle safety feature discounts: Airbags, anti-lock brakes, or anti-theft devices may qualify for lower premiums. If your current vehicle lacks these features, you can start the auto financing pre-qualification process with Credit Acceptance to see if you can replace your car with a safer model.

Is switching insurers after an accident a good idea?

Switching insurance providers after an accident can sometimes lead to lower rates, but it’s wise to wait for your renewal notice to see the exact rate increase before deciding to switch. If you do decide to make a change, make sure there’s no lapse in your coverage as you transition from one insurer to the other.

Protect your finances by making smart insurance choices

An accident doesn’t have to derail your financial future. By understanding what hurts and helps your insurance rates, you can proactively manage your policy, minimize the impact, and protect your wallet.