How long does it take before an accident increases my auto insurance premium?

Question of the week:

When will an accident or speeding ticket start to affect my car insurance premium?

Answer:

Generally, if you have an accident within the first eleven months of your auto insurance policy being in effect, you will see your policy premium increase at your annual renewal. In some states, if you are within the first five months of your policy and you have a six month renewal, you may also see your premium increase at that time.

We say “may”, because just the fact that you have been in an accident or received a violation, your premium may not increase – at least significantly – as there are many factors that insurance companies use in calculating your premiums. That said, it is likely that your premium will go up.

As you’ll notice from what we stated above, if you get into an accident or receive a driving citation within one month of either your six month or annual renewal (and perhaps as much as 45 days before your renewal) you will most likely not see your premium increase at your next renewal, as your insurance company will have already calculated your premium for the next six months / year.

Let’s assume for a second that you got in an accident, have received your increased rate for the next year in the mail from your insurance company, and are not happy with it. What can you do?

Well, first of all, whatever you do, do not let your policy lapse. An accident / violation plus a lapse in coverage will only make it harder for you to get a satisfactory rate in the future. Secondly, if you would like to stick with your present insurance company, a few ways that you might be able to offset your new higher premium could include going with paperless billing, changing to a higher deductible (say from $500 to $1000) and paying your year’s policy in full, all of which may provide you discounts.

However, probably the best option for getting your rate lower would be to shop around and compare quotes from various insurance companies. While the accident / violation will still be out there for any insurance company to see, other insurance companies may use different variables to calculate your quote, and the accident / violation might carry less weight with another insurance company.

If you do decide to shop around for a better quote than what your current insurance company is offering, make sure to do that shopping at least 10 days before your renewal date (and 2-3 weeks before if possible). Not only will you ensure that you will not have a lapse in coverage, but some insurance companies also offer discounts for switching in advance of  when you need your new policy to start.

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