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How Much Does Insurance Go Up After An Accident?

November 9, 2023

Accidents happen, but when they do, one of the first worries that you might have is the potential impact on your car insurance premiums, especially as the cost of living rises and belts are squeezed more than ever.

So, what kind of premium hike can you expect if you have an accident? According to data from Compare The Market, the cost of your car insurance premium can rise anywhere from 20% to a whopping 50% after a claim on your insurance following an accident. To put that into perspective, this could mean a regular monthly payment going from £48 to £72 - a pretty steep hike.

That said, a number of factors - such as no-fault claims and the severity of the accident - will ultimately play a determinative role in calculating your new premium. In the following blog, we’re going to take a look at some influences behind premium increases after road accidents, and where (if possible) they can be avoided or mitigated. Let’s dive in!

What Factors Influence Car Insurance Rate Increases?

Severity of the Accident

The severity of an accident plays a pivotal role in how much your premium might rise. Minor incidents, like a slight scrape or dent, can have a less dramatic impact than more significant accidents where injuries occur or where substantial property damage is involved. Insurance companies calculate potential future risks based on past events, so a more severe accident can be seen as an indicator of higher future risk.

Your Driving Record Prior to the Accident

Insurers place significant weight on your driving history when setting premiums: if you had a spotless record before the accident, your rates might not rise as sharply as they would for someone who had previous incidents. On the other hand, drivers with multiple previous claims or convictions are more likely to see a significant hike in their rates after another incident.

No Fault Accidents

Another important point to note is that insurance companies will also usually determine a premium hike based on whether or not you make a no fault insurance claim. A no fault claim means that the accident was not caused by you, and you have enough documentation (photos, videos, witness accounts etc) to support your claim.

Your Insurance Company's Policies

It’s also important to note that each insurance provider has its own method for calculating premium increases after an accident. Some companies might be more lenient with first-time claimants, while others have stricter policies in place; it's always beneficial to understand your insurer's stance on this, which can typically be found in your policy details or by speaking directly to your provider.

Immediate Effects on Premiums

Soon after an accident, especially if you're at fault, you might notice a direct change in your premium costs. However, the true impact often becomes most apparent when it's time to renew your policy. It's also worth noting that even if you decide to switch providers, the new insurer will likely consider the recent accident when offering a quote.

Average Percentage Increase

Although the exact percentage varies based on multiple factors, it’s likely that most UK drivers can expect their insurance premiums to increase by around 10-30% after making a claim for a minor to moderate accident, which is a slightly more reassuring possibility than Compare the Market’s 20%-50% figure. However, this range is merely an average, and individual cases can differ substantially based on the circumstances surrounding the accident and other influencing factors highlighted earlier.

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Accident Forgiveness and Rate Protection

Many insurance companies in the UK have recognised the concerns drivers have about escalating premiums after an accident, and as a response, some providers offer "accident forgiveness" as part of their policies. This often means that your first at-fault accident won't result in an increased premium upon renewal. However, it's essential to read the fine print: some policies might require you to be claim-free for a set number of years before you qualify for accident forgiveness.

Another option available with some insurers is rate protection. For an additional fee, this add-on ensures that your rates won't rise after your first claim; it acts as a safeguard against potential hikes and might be worth considering if you're worried about future premium increases.

Impact on No Claims Bonus

The No Claims Bonus (NCB) is a discount given by insurers to drivers who haven't made a claim over a certain period. It's one of the most substantial discounts available, and its loss can lead to a significant premium increase. After an at-fault accident, you'll likely lose some or all of your NCB, resulting in higher renewal rates.

For drivers involved in a non-fault accident, the NCB might remain unaffected if the insurer can recover all the costs from the responsible party. Still, it's always a good idea to clarify this with your insurance provider.

Minimising Car Insurance Premium Increases: Top Tips

Shop Around

When renewal time comes, don't simply accept the first quote you receive. Use comparison websites or consult with an insurance broker to find the best deal.

Increase Voluntary Excess

If you can afford to pay a higher excess in the event of a claim, this could help reduce your premium. However, ensure it's an amount you're comfortable with.

Drive Safely

It’s simple: the best way to avoid premium hikes is to prevent accidents. Consider advanced driving courses to improve your skills and potentially qualify for additional discounts.

Inquire About Discounts

Whether it's for installing a dashcam, parking in a secured garage, or having an immobiliser, there might be discounts you're unaware of. Always ask your provider about potential reductions.