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Car Insurance Rates after an Accident

There are a few main factors that most drivers use to determine which company they will go with when it comes time to go shopping and pick an auto insurance provider. Price is usually the top priority for most drivers, a fact which completely understandable. Service and reputation usually come next in the pecking order. Again, these two factors are very important and they should be addressed. But there is something that almost all of us driver miss when we go shopping for our auto insurance. The auto insurance company's surcharge schedule, which is their predetermined rate of increase in premiums should we get into an accident, is a factor few if any of us really considers. Many drivers are not even aware that such a schedule of surcharges even exists.

Example of Premium Surcharge

But they do. They are the way insurers are able to be consistent in the measures they take to adjust rates in given situations. Here is an example. There was a driver who had a perfect driving record for over fifteen years. Last month he caused an accident. Now there is a claim on his car insurance policy from the other driver in order to pay for the damages he caused. The guilty driver has a feeling that his rates are going to go up when his renewal paperwork comes in the mail, but he is not sure if they will or how much. He wonders if there might be a standard rate increase after one accident.

The answer to this question is impossible to predict in this hypothetical situation because we do not know the man's insurance company. Every company has different surcharge schedules. But these schedules can be known. Car insurance companies are required to file surcharge rates with their state's insurance department in every state they work in. In some states, auto insurance companies are actually required to give their customers a copy of the surcharge schedule. But in these states, the schedules are very difficult to read, a fact many think is purposeful.

The schedule often lists out points and percentages rather than just giving out a flat table, so those who are interested in knowing have to do their own math in order to get things figured out. But it can be well worth all the extra effort involved. Finding out that one company surcharges you three times more than the next can help you decide which one to go with if both are otherwise pretty close on price. It is well worth it to dig in and find out what you need to know to give you the knowledge to make the right choice.

Some Follow Standard Models

Some auto insurance companies simply follow a standard model devised by the Insurance Services Office (ISO), rather than come up with their own formulas. Either way, consumers can find out how their insurer figures out these things by doing the research necessary to know. Some insurers operate with their own surcharge schedules, some higher than the ISO's and some lower.

Accident Forgiveness

A relatively new concept called accident forgiveness is making waves as it gains in popularity. Accident forgiveness works differently from these surcharge schedules. In fact, it is based on a premise that the insurance company will not raise the insured's rates at all for their first at fault accident in an attempt to keep the policy affordable. There are limits to these policies. Many times there is a limit attached to the monetary amount of damage caused in the accident, and there are other limits and exceptions as well. If you are with a company that offers accident forgiveness, consider yourself blessed, but also do some homework and be sure you find out all of the details of how that company works its particular program. Much like with these surcharges, there is no universal formula to accident forgiveness that applies across the industry, and all the companies that use this feature do it their own way.

But even with that being the case, it is still a nice thing that the insurers are offering, and it at least gives you a little room for error as a driver. This is an example of ways you can find out more about a company by looking beyond the rhetoric to see what is really going on.

The initial price you pay for auto insurance is a very important factor to consider when you are thinking about which auto insurance company to go with for your insurance. But thinking about what could happen to that price after an accident can be very instructive. There are many different factors one could focus on in looking for the best company to work with, but car insurance rates after an accident certainly deserve some of our attention.


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