Smart Auto Insurance Blog

According to the press release “The Impact Accidents Have On Auto Insurance and Keeping Rates Affordable” found on wiredprnews.com, accidents affect auto insurance rates in numerous different ways.  Just because you have an accident doesn’t mean your rates will automatically increase.  It’s beneficial to understand what will ultimately affect your rates.

A very critical aspect of an accident is whose fault was it?  If the policyholder is found to not be at fault then it’s likely their auto insurance rates will not be affected.  Being at fault is what will probably change your rates.  Depending on the company’s underwriting guidelines, one may lose their good driver discount which can be up to 20%.  Injuries can affect your rate as well with the more serious the injury the higher the rate is affected.  If the collision is with an emergency vehicle like an ambulance or police car this can spike rates.  And of course if there are any drugs or alcohol involved rates can be severely affected.

Many insurance companies such as First Acceptance Insurance try to offer fair rates whenever possible.  If you are in an accident and your insurer raises your rates, it may be worth your time to shop around since different insurers have different underwriting policies and an accident may not affect your rate as much.

According to the article “Colmans: Small, Inexpensive Cars May Be Pricier On The Repair End” in the Athens Banner-Herald, The Insurance Institute for Highway Safety (IIHS) released a study comparing repair costs of damage to a handful of small, inexpensive cars.  More and more Americans are turning to cheaper cars as they are trying to save money in this tough economy. 

The study found that surprisingly mini and micro-car bumpers have expensive damage, and none of the seven vehicles tested rated good according to the IIHS.  Just one, the Smart Fortwo, was rated acceptable for bumper performance.  5 out of the 7 earned poor ratings and one earned a marginal rating.

These types of studies directly affect auto insurance rates.  Many auto insurers use a service that develops number symbols based on several variables including the cost of damage repair, to help them in determining the price for insuring a certain model and make of a car.  So if it is determined that it is expensive to repair your particular car, then it may end up affecting what you are paying on your auto insurance.  So while you are saving money on the less expensive make and model, you may end up seeing a rise on your rate.  Shop around if this is the case to ensure you are getting the deal deal.

If you have credit problems you could end up paying more on your auto insurance despite your perfect driving record. Credit histories are just one of many factors used to determine auto insurance rates. Research has shown that drivers with poor credit history are more likely to file claims which in turn cost the auto insurance companies money.

The credit report is used as a predictor of risk, and it’s believed that it’s less likely for a person who is inherently financially irresponsible to suddenly change their behavior. But through repairing your credit and shopping around for auto insurance as your credit history changes over time, you may be able to lower your rate and save yourself money. Pay your bills on time and keep your debt level in check, and it could keep your auto insurance rates down.