Imagine you’re driving to work one morning, following all the rules of the road. Suddenly, another car comes from seemingly out of nowhere to hit the passenger side of your vehicle.
The good news is that no one is hurt. Also, the accident is clearly not your fault. The other driver’s insurance should pay for the damage to your car, and you shouldn’t have to worry about a charge from your own insurance company. Right?
Well … maybe not.
Do insurance rates go up after a not-at-fault accident?
If a car accident is not your fault does your insurance go up? Some states (including California and Oklahoma) prohibit insurance companies from punishing faultless drivers. However, research suggests that in other areas of the country even not-at-fault accidents can potentially lead to premium hikes.
The Consumer Federation of America (CFA) found in a 2017 report that drivers in cities across the U.S. saw rate hikes following accidents for which they weren’t at fault.
Not-at-fault drivers in New York and Baltimore experienced the biggest hit to their wallets. In the New York borough of Queens drivers saw an average premium hike of $401.
Similarly, a 2018 State of Auto Insurance report from insurance site Zebra found an average premium increase of 7% for U.S. policyholders following a not-at-fault incident.
What a no fault insurance claim can mean
So why might some insurers penalize safe drivers? And are drivers more at risk for seeing a premium surcharge if they have been involved in multiple not-at-fault accidents?
There is no one easy answer to these questions. For one, your insurer may believe that having an accident of any kind may make you a higher-risk driver.
That’s the view of James Lynch, chief actuary, and vice president of research and education for the Insurance Information Institute. He says it could be that “the insurer’s actuaries have analyzed the situation and found that being in an accident in the prior period – even if you weren’t at fault – makes you more likely to be involved in one in the upcoming period.”
Other factors that affect your insurance
Assessing the true cause of your rate hike following a not-at-fault accident may also be harder than it seems, says Neil Alldredge, senior vice president, corporate affairs, of the National Association of Mutual Insurance Companies.
‘“The combination of factors that insurers use to set rates is dynamic,” he says. “As a result, identifying a singular factor, such as not-at-fault accidents, and trying to determine their relative weight on rate setting, is likely not going to provide the entire picture.”
However, other issues may have played just as significant a role – or maybe even more so.
The whole concept of fault is a little complicated. It’s possible that, even though you believed the other driver was 100 percent to blame when the accident occurred, you actually contributed. In some cases, both drivers see a premium hike because they may have both played a part in the accident, or it is simply unclear where the blame lies.
If you plan to file damages against the at-fault driver’s insurance, you may wonder if you should even get your own insurer involved, given the possibility of a surcharge. Not doing so would be a mistake, says Lynch.
“If you have collision insurance, you should file a claim with your company under that coverage,” he says. “Your insurance company will normally handle your claim, then get itself reimbursed from the at-fault driver. And your adjuster will probably be better at managing this situation than you would be able to.”
If you feel your insurer has punished you unfairly following an accident in which you weren’t at fault, you can always shop around for a new policy.
Robert Hunter, the CFA’s director of insurance and the former insurance commissioner of Texas, says he is adamantly opposed to premium hikes that penalize not-at-fault drivers. In most cases, he says, “there is no good reason for auto insurers to raise rates for not-at-fault accidents.”
He adds, “I, as an actuary, have never seen data that justifies increasing a person’s rates for not at fault accidents.”
As you shop, ask multiple insurers how they generally handle not-at-fault incidents before you purchase a plan.
Says Lynch, “This is a situation that different companies handle differently. So it is definitely a good time to test the market.”
There’s plenty of competition for your auto insurance dollars, so it could pay well to shop around and switch car insurance companies to find a better deal. This doesn’t have to be time-consuming experience it was in the past.
The Cover app can get you a quote in a matter of minutes. Just answer a few short questions, and we will send you an initial quote within two minutes.