A no-fault accident involves two drivers who are not at fault. No-fault jurisdictions pay for injuries and car damage by each driver’s insurance. No-fault accidents remove the need to assign responsibility, but drivers frequently question how they will affect their vehicle insurance premiums.
While insurance rates don’t always increase after a no-fault accident, there are some factors that may cause your premiums to go up. Understanding how insurance companies calculate premiums and the specifics of no-fault accidents can help drivers know what to expect from their provider after a claim.
Factors That Determine Insurance Premiums After a No-Fault Accident
Insurance companies look at a variety of factors when calculating premiums. After filing a no-fault claim, the following aspects may impact what you pay:
Claims History
Insurance providers review your claims history when determining rates. Too many claims within a short period, regardless of fault, may be seen as a higher risk and lead to increased premiums. However, a single no-fault accident is unlikely to drastically impact what you pay.
Types of Coverage
The types of coverage you have to play a role too. Collision and comprehensive coverage pay for damage to your vehicle, so your rates for these may increase after a no-fault accident. However, other coverages like liability and medical payments may not be affected.
Circumstances of the Accident
Your insurance company will investigate the specifics of the accident. Evidence like photos, police reports, and witness statements help determine what happened. If they decide you were partially at fault despite no official determination, premiums may still increase.
How No-Fault Accidents Can Impact Insurance Rates?
By definition, no-fault accidents shouldn’t cause rates to rise since neither party was directly responsible. However, we operate in an imperfect system so premiums can still be affected. Here are some potential consequences:
Potential Increase in Premiums
It’s possible your insurance provider may raise rates after a no-fault accident. The increase is typically small, around 5-15%. However, amounts can vary significantly based on your policy and claims history. Generally, only the coverages used to pay for damages and injuries will go up.
Comparing Increases for At-Fault and No-Fault Accidents
Premium increases are usually lower after a no-fault accident compared to one where you were deemed at fault. At-fault accidents can raise insurance rates by 20-30% on average. Significant rate hikes are unlikely unless the no-fault claim pays out large amounts or indicates high risk.
Exceptions to No-Fault Accidents and Insurance Rate Increases
While no-fault accidents can lead to higher premiums in many cases, there are some exceptions where rates may not be impacted:
State-Specific Laws and Regulations
Some no-fault states prohibit insurers from raising rates after accidents where their policyholders were not directly at fault. Michigan, New York, and Florida have laws restricting premium increases.
Instances Where Rates May Still Increase
Even in states with laws against no-fault rate hikes, premiums can still go up under certain circumstances. These include multiple no-fault claims within a short span or very high loss payouts from a single accident.
Tips for Managing Insurance Rates After a No-Fault Accident
If you want to avoid significant rate increases after a no-fault accident, here are some steps to take:
Shop Around for the Best Rates
Compare quotes from multiple insurers after filing a claim. You may find a cheaper premium at a different company. Switching providers can offset potential rate hikes.
Enroll in Defensive Driving
Taking a defensive driving course shows insurers you are actively working to avoid future accidents. It can qualify you for a discount of 5-15%.
Take Advantage of Safe Driver Discounts
Insurance companies offer discounts to safe drivers with few or no claims. Ask your agent about ways to lower premiums through accident forgiveness or diminishing deductibles.
Discuss Options With Your Insurance Provider
Contact your agent or company directly to discuss how the no-fault claim may impact your rates. They can explain costs and advise on ways to minimize increases. Being proactive is key.
While no-fault accidents shouldn’t necessarily raise insurance rates, there is still a possibility your premium will increase. Following these tips can help mitigate potential rate hikes after filing a no-fault claim. With some effort, drivers can maintain affordable coverage even after submitting claims.
