Car Accident Insurance

Car accident auto insurance protects you against financial loss if you have an accident. It is a contract between you and the insurance company: You agree to pay the premium, and the insurance company agrees to pay your losses as defined in your policy if you’re in a car accident. Car insurance provides property, liability and medical coverage:
• Property coverage pays for theft of your car or damage to your car as a result of a car accident.
• Liability coverage pays for your legal responsibility to others for bodily injury or property damage as the result of a car accident.
• Medical coverage pays for the cost of treating injuries, rehabilitation and sometimes lost wages and funeral expenses as the result of a car accident.

Even if you’ve had a clean driving record for a number of years, if you have a car accident your insurance rates will probably increase. The size of the increase will vary – each insurance company has different policies and standards, but there are some basic rules of thumb.
Many companies follow the Insurance Services Office (ISO) standard of increasing the premium by 40 percent of their base rate after your first at-fault car accident. Their base rate might be different than your rate: A base rate is the average amount of claims paid plus the insurance company's claims processing fee.
For example, if your company's base rate is $500, you'll pay $200 more. So, if your premium was $400 before the accident, your premium will be $6000 after the car accident — an increase to you of 50 percent. However, if your premium before the car accident was $200, you're going to pay $400 after the car accident — an increase to you of 100 percent.
Some insurance companies won’t figure your increase based on 40 percent of their base rate but on 40 percent of what you were paying before the car accident. So if you were paying $400 before your car accident, you might pay $560 after your car accident. Keep in mind that your location, your age, and your driving record, as well as the "loss experience" (which means the claims made) of drivers similar to you will affect the percentage increase in your premium payment.
When an insurance company decides to raise your premiums because you make a claim, it doesn't follow any hard and fast rules; many factors are involved. That's why you might find yourself facing higher increases based on your individual circumstances. For example, if you make a claim due to a car accident and have a birthday before the next renewal period, your birthday could bump you into a higher risk category along with the claim, dramatically increasing your rate.
You'll run this risk mainly if you're 56 or older, because that's when premiums generally start rising because of your age. Drivers between the ages of 40 and 55 are generally regarded as the lowest-risk drivers. Or, if you've made an accident claim and bought a more expensive car before renewal time, you'll likely see a significant increase — perhaps as much as 100 percent — in what you pay for car insurance.
Remember that circumstances can work in your favor, too. If you turn 40 and enter a lower-risk category, or if you buy a car that's less expensive to insure, your savings might help offset any increase due to an accident.
Some insurance companies give their customers “forgiveness” after their first at-fault car accident and don’t raise the premium. Forgiveness isn’t an industry-wide practice, however, so you’ll have to ask your agent whether your insurer offers forgiveness after a car accident, and whether you might qualify based on your age, driving record, and other factors.
State Farm, for example, forgives the first car accident for customers who have been with the company – accident –free – for at least nine years. When you shop for auto insurance, ask a company or independent agent whether the insurer offers first-time car accident forgiveness.

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