Will My Insurance Rates Increase After My Car Accident – Even if I’m Not At-Fault?

For most folks, the answer is likely to be disappointing. If you caused the accident, it’s not a matter of if your rates will rise, it’s a matter of how much they’ll rise. As you’ll see below, your insurance rate hike could be enormous. And, even if you aren’t found the at-fault party, it’s still highly probable that your car insurance costs will increase.

You may be asking incredulously right now, “Wait a minute – I’m not at fault and my rates can still increase? What’s up with that?” Contrary to what you may imagine, your premiums could go up even if you have a policy with an “accident forgiveness” feature;  according to AutoInsurance.org, surcharges up to $500 – above and beyond your regular insurance premiums – can still be assessed following an accident.

If that sounds bad, it could get even worse. If you’re found liable for a major accident, even in a no-fault state like Michigan, your insurer could opt to not renew your policy going forward. Note that they’ll still have to cover you for the time being, but they could decide you’re too risky to continue to insure. Unfortunately, you won’t know that until it’s time to renew. If at that point your company notifies you that they have decided not to renew your policy, you do have some recourse. More on that in a moment, but let’s first talk about those annoying rate increases.

How is My Rate Determined? And What Can Make It Go Up (or Down)?

Many factors go into setting your car insurance rate. What you pay is partially based on your driving record, which provides data that insurers use to determine your insurability and to minimize their risk.  If you’ve been in one or more at-fault accidents, or have multiple moving violations (speeding tickets, failure to obey a traffic signal, etc.), you’ll pay more. Those kinds of offenses are called chargeable incidents, which is an appropriate term since they definitely affect what you’re charged for insurance!

In some states, insurance companies also use consumer credit ratings to assess risk and set rates, since it’s been shown that drivers with poor credit records are more likely to make claims against their policies than people who have better credit histories. While Michigan doesn’t permit raw credit scores to be used in this way directly, insurers are still allowed to review your “credit-based insurance score” which uses elements of credit history to help predict risk. The Detroit Free Press recently reported that one insurance company has entered the insurance market in Michigan with a pledge not to use such scores in setting rates… but the vast majority of other companies continue to factor in insurance scores.

Where you live also plays a role in pricing. Living in a neighborhood at high risk for accidents or car thefts will result in being charged higher insurance costs. In an informative previous post we mentioned that folks who reside in the city of Detroit often pay much more than those living just a few miles outside the city limits. So, moving into a new home or apartment could raise your rent or mortgage payment — but it could also possibly mitigate that increase by helping you cut your automobile and homeowners insurance costs.

The type of vehicle you drive is another key factor that plays into your insurance rates. More expensive and luxurious vehicles simply cost more to repair when they’re involved in accidents, and some popular vehicles are more likely to be stolen. On the other side of the coin, some cars are infrequently hotwired, and others are relatively inexpensive to fix after a collision. Those factors typically affect car insurance premiums as well. As noted by KBB.com, if you drive a Maserati or top-of-the-line Tesla, you’ll pay more for insurance, while more standard Jeep Wranglers, Chrysler Voyagers, and Subaru Outbacks are on the other end of the premium cost spectrum.

Another element to consider is whether you truly want to report an accident. Sometimes it can be less costly to simply pay for the repairs yourself rather than making an insurance claim and seeing your premiums subsequently increase for years due to a minor incident. One helpful insurance agency in Traverse City has published a thoughtful discussion of the thinking that goes into making this kind of decision, which weighs the cost-benefit equation of filing a claim versus paying your own repair expenses.

If I Cause an Accident, How Much Will My Rate Rise?

Probably a lot. Recent data from carinsurance.com shows average cost increases of 48% in Michigan for drivers who are found at fault in just a single accident. ValuePenguin.com reports that Michigan insurers on average charge more than double the previous premiums for customers who cause collisions resulting in injuries to other individuals – the single largest rate increase for any state in America.

So, how can you deal with these cost hikes? Well, you could take our advice and drive a cheaper car … move to a “safer” neighborhood, or choose a vehicle that’s less likely to be stolen. Additionally, you could verify that your driving record is accurate. If your rate seems too high – or suddenly rises precipitously – you should check your official driving record to be sure you aren’t being charged for an accident you didn’t cause.

How Can You Review Your Driving Record?

The Michigan Secretary of State maintains a database that’s available for review by drivers and insurers.  To see your personal record, you can use their online reporting system. If you haven’t done so already, you’ll need to establish an account and verify your identity first. Or if you’d rather obtain this information in person at the Secretary of State’s local office, be prepared to wait in line and have your checkbook handy – there’s a $12 fee for your report via either method. Requests can also be made by mail using this form, and the same fee applies.

Furthermore, you can find information about your personal driving record through two independent services frequently used by insurance companies in the rating process.

The A-Plus system is a database that includes details on any auto insurance claims you might have filed in the past, and it will give you one free, annual report. It’s a good idea to review this information to ensure its accuracy and verify you aren’t being mistakenly blamed for an accident you didn’t cause. To get your report, you’ll need to complete the online request form and provide additional information including your driver’s license number, insurance policy number, current and previous mailing address (if you’ve lived in your present home less than five years), vehicle identification numbers (VIN) for all your automobiles, and the same data for anyone else covered by your car insurance policy.

The CLUE (Comprehensive Loss Underwriting Exchange) system is also frequently used by insurance companies to rate prospective customers. It provides historical information going back seven years on your car insurance claims and insurance payouts. Filing an online request for this information is a bit simpler than using the A-Plus system, since it requires less identifying data, but you’ll still need to enter your social security number, driver’s license number, and date of birth among other personal, identification details.

Finally, if all else fails, and your rates are still going through the roof, the state insurance commissioner’s office may be able to help. As a last resort, you can also check with the Michigan Auto Insurance Placement Facility, an organization that helps consumers who are eligible for insurance but find themselves unable to obtain policies through the competitive market. And remember — while we can’t help you get insurance, we’re always available if you or someone you love are injured in just about any kind of accident. For information and assistance, feel free to give us a call at 855-MIKE-WINS (855-645-3946). Or contact us online, 24/7.

Content checked by Mike Morse, personal injury attorney with Mike Morse Injury Law Firm. Mike Morse is the founder of Mike Morse Law Firm, the largest personal injury law firm in Michigan. Since being founded in 1995, Mike Morse Law Firm has grown to 150 employees, served 25,000 clients, and collected more than $1 billion for victims of auto, truck and motorcycle accidents. The main office is in Southfield, MI but you can also find us in Detroit, Sterling Heights and many other locations.