This guy needs a car insurance claim.

How to keep your car insurance affordable AFTER an accident

I got into a car crash the day before my wedding in 2010.

I was in a shopping plaza parking lot, and so was a guy driving a white van. We were both coming around a blind corner with no signage at about 20 mph. I crunched his passenger door and my front end.

Luckily, neither of us was hurt. I rented a car to finish up last-minute wedding preparations and to get some guests (and myself) to the chapel. Besides the extra stress, I thought everything worked out fine — until my insurance rate jumped almost 50 percent.

More than three years later, my rate is now a lot lower than it was prior to the accident. But a recent study for InsuranceQuotes.com suggests I kind of got screwed, at least compared to the average driver. The one study used was a “45-year-old married female driver who is employed, has an excellent credit score, no lapse in coverage and has filed no prior auto insurance claims.”

Here’s what I learned…

1. Being young sucks

At the time of the accident, I was less than a month shy of my 25th birthday.

That’s a magic number for insurance companies. At the stroke of midnight on your 25th birthday, you instantly become a more mature, responsible driver who deserves to pay a lot less for car insurance. By then you’ve mastered the fine art of parallel parking and, of course, you never do risky teenage things like text and drive.

Hartwig is an expert on car insurance claims.
Insurance Information Institute President Robert Hartwig

Companies like Progressive and State Farm aren’t afraid to admit they charge young people more — because they have data to back them up. Younger drivers are less experienced, more reckless, and more accident-prone — especially guys, according to Robert Hartwig, president of the Insurance Information Institute. (It’s an industry group whose members include everyone from Geico to MetLife.)

“They are the most risky to insure because statistically they are involved in a disproportionate number of accidents, including fatal accidents, and engage in risky behaviors such as driving while intoxicated,” Hartwig says.

What you need to know: Your insurance company won’t call on the day you turn 25 to sing happy birthday and lower your rate on the spot. But Hartwig says their records indicate your age and that will automatically be accounted for in your next policy or renewal.

What you can do: The only way for a younger driver to distinguish himself from the statistically more reckless teenage masses is to avoid accidents, which I failed at. But some insurance companies also offer discounts for good grades, so be sure to ask.

2. You can be dinged even if you don’t file a claim

I didn’t mind my beat-up ’96 Ford Explorer, which had a broken odometer already well past 200,000 miles, getting a bit more beat up. I didn’t even consider keeping comprehensive and collision coverage.

But the other guy filed a car insurance claim to repair the damage to his van. Since the shopping center is private property and there were no signs, I wasn’t cited. But the insurance companies decided I was at fault. That, combined with the police report, raised my rate.

“That’s gonna wind up in your driving record,” Hartwig says. “There’s been an official police report on the issue, and a typical insurer will look at your history for five years for such things.” (But something like a DUI never goes away, he adds.)

What you need to know: Collision covers the acts of Bob (or me, I guess), and comprehensive covers the acts of God — fire, hail, falling trees. While collision and injury claims will hurt your rate, comprehensive claims barely affect it because drivers have no control over the damage. Rates go up an average of 1.74 percent per year after a comprehensive claim, according to InsuranceQuotes.com. In 30 states, rates rise 1 percent or less on average.

What you can do: If you’re driving an older vehicle that’s not worth much, like I was, you may consider dropping comprehensive and collision coverage — but only if your state doesn’t require them. While every state has a required minimum amount of liability coverage, dropping optional coverage is one way to save. Another, Hartwig suggests, is to raise your deductible.  “Make sure you can afford it,” he says. “If you move it from $500 to $1,000, understand you’re now responsible for the first $1,000 in damage, but in exchange your premium will go down.”

3.Insurers don’t know everything…

When an agent interrupted my honeymoon to talk about the accident a few days later, I didn’t mention that I was a newlywed. According to Hartwig, I should have.

“It’s one of many benefits of getting married,” Hartwig says. “It usually costs less to insure a married individual.” But unless you add your spouse as a driver to your policy, insurers have no immediate way of knowing.

What you need to know: There are dozens of factors involved in your premium, including some that you have at least a little bit control over and which sometimes change.

What you can do: Treat your agent like a Facebook friend — at least let them in on the major changes in your life. Marriage and a lot of other things could affect your premium, such as when you move or if your job (and the amount of driving you do) changes. “If you’re just married and going to move in together, you also may be able to get a multi-policy discount that would apply across your car and your home,” Hartwig says.

4. …but they do know a lot.

My rate is the lowest it’s ever been, and part of that’s age and time since the accident. But another part, I’m beginning to think, is that I’ve moved on to a Honda Civic. Hartwig tells me there a lot of things about your make and model that affect your rate, and that many people never think about it.

“When thinking about buying a car, many people see one and fall in love with it and only afterward think about insurance,” he says. “But there are a lot of factors, including the likelihood of it being stolen, how far the car’s being driven, or where the car’s being kept at night.”

What you should know: The track record of your kind of car is just as important to insurers as the track record of people like you.

What you can do: Hartwig suggests calling up an agent and asking for quotes before you commit to one car over another. “The agent should be able to tell exactly what it would cost you, and the difference might surprise you,” he says. “A lot of things you might not know about even comparably priced cars may be things that make one materially more expensive.”

5. Accidents don’t always hurt your rate

There are two ways — besides being more careful — I might have avoided a rate hike. Not being blamed for the accident is one.

“It’s important for consumers to note that rate increases only apply to bodily injury and property damage claims where you are at fault,” InsuranceQuotes.com says. “If you are rear-ended by another driver, their insurance or your uninsured motorist coverage will cover your claim and your rates won’t be affected.”

The other? Being insured for longer, another mark against the young. I learned that my insurer and some others offer something called accident forgiveness, where they are willing to look the other way if you meet their qualifications. In my case, I would’ve needed another year of insurance under my belt — which, of course, is their version of a loyalty program designed to keep you from switching to competitors.

What you need to know: Not everybody offers accident forgiveness, and no two insurers do it the same way.

What you can do: When shopping for insurance, look beyond price to perks like accident forgiveness. Don’t stop there: Carefully read the terms and conditions to see in which scenarios that protection breaks down.

Auto Insurance Rate Increases By State (Map)

Average rate hikes after an insurance claim

That’s my life. But let’s go back to what InsuranceQuotes.com found by seeking quotes in all 50 states for its nigh-perfect middle-aged female driver.

The national average bump after a single claim was 38 percent. With an average national premium of $791, that means a hike of just over $300. Look at state-by-state results, though, and you’ll see rate hikes varied widely. For claims of more than $2,000, these five states had the biggest average hikes…

1. Massachusetts — 67 percent increase
2. California — 62 percent increase
3. New Jersey — 59 percent increase
4. North Carolina — 47 percent increase
5. Minnesota — 45 percent increase

These states had the lowest…

50. Maryland — 20 percent increase
49. Alabama — 22 percent increase
48. Michigan — 23 percent increase
47. Wyoming — 23 percent increase
46. Oklahoma — 25 percent increase

My state, Florida, ranked 34th with an average increase of 30.3 percent. You can see how your state compares in the chart above.

Why the big disparity between states that really aren’t very far away from each other, like Maryland and Massachusetts, or Arizona and New Mexico?

Hartwig says it has to do with state laws and the insurers themselves, but suggests that ultimately what people pay in one state isn’t that different from in its neighbors:

Think about it this way: A state can establish a rate that’s relatively low, but allow very substantial increases in the event of an accident claim of some sort, or it could establish rates relatively high but that produce smaller variation if you’re involved in an accident. Either way the insurer collects the same amount of premium to cover loss, but you may have a situation where there’s more loss sensitivity. It’s a combination of state laws and how insurers evaluate risk.

I also asked Hartwig his opinion of the InsuranceQuotes.com study, since he was quoted in the article about it. He suggested taking the study with a grain of salt.

“Very few people would likely be seeing increases of the magnitude they saw [in the study],” he says. “Going out and getting price quotes is not the same thing as what people actually buy.”

And even if you do get shafted by a big rate hike, you can still go comparison shopping. According to Hartwig, “even if you have a driving record with a few blemishes, the market is competitive at every level of risk.”

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