Insurance rates go up for many reasons, not just because of an accident. However, getting into a wreck is a good way to see your rates skyrocket. Even if you are not at fault for the accident, you could see your rates climb. If you are at fault, not only could you see your rates rise, but if this is not your first accident, some insurance companies will no longer cover you.

Reasons for Car Insurance Costs to Go Up

In some cases, insurance companies raise rates to follow inflation and the increased cost of doing business. These raises are usually small.

However, if you see a significant increase in your auto insurance premiums, it might be because:

• You moved to an area that poses a higher risk to drivers. Insurance companies price by zip code.
• You purchased a new vehicle.
• You added more coverage to your policy.
• You received a moving violation.
• You got into an accident.
• You added a teenager to your policy.
• You added another adult to your policy (though the rate increase is probably not as high as adding a teenager).
• You added another vehicle to your policy.
• More people who use the same insurance company get into accidents and make claims.

If you are unsure why your insurance premiums went up, you can call your insurance company to ask.

Points on Your License

If you commit a moving violation, you will receive two points on your license if you are convicted. If you commit a moving violation that results in a crash and are convicted, you will receive three points on your license.

The points stay on your license for three years from the date of the conviction. Even a two-point conviction can cause your insurance rates to rise.

Certain violations also add surcharges. If the conviction is for driving while intoxicated and is the first offense, you pay $1,000 each of the three years the points remain on your license. Subsequent DWIs are $1,500 per year. And, if your BAC is 0.16 or higher, the yearly surcharge is $2,000.

If the court convicts you of driving without insurance or a valid license, the surcharge is $250 per year for each violation. Driving without a license comes with a $100 surcharge.

Insurance companies pull your record and increase your premiums, especially for moving violations with surcharges.

Credit Reports

Insurance companies also pull your credit report when underwriting your auto insurance policy. If you have a low credit score, many insurance companies will increase your premiums. If you get into an accident and have hospital bills in collections, your credit score goes down—and your insurance premiums go up.

How to Decrease Insurance Premiums

Other than the obvious solution of not getting moving violations and keeping your credit score up, you can decrease insurance premiums by keeping your driving record clean and sticking with one insurance company for more than a year.

As the insurance company sees that you do not wreck or incur moving violations, the risk of insuring you goes down, which means your premiums decrease.

What Automobile Accident Insurance Covers

Accidents are expensive, and whether you are in an accident or not, insurance companies raise premiums to cover the costs of accidents. The insurance company might raise everyone’s premiums by a few dollars if one of their customers gets into an accident. If you get into an accident, you could see a significant increase in your premiums.

Vehicle insurance covers compensatory damages and punitive damages. After an accident, the defendant pays these damages to the plaintiff. If the insurance company has to make a significant payout—in the millions—the at-fault driver will see a substantial increase in their premiums.

In most cases, the amount of premiums a person pays is much less than what an insurance company pays out after an accident. For example, the defendant’s insurance premiums are $1,000 per year. The defendant wrecks and totals your vehicle and his vehicle, and you suffered catastrophic injuries that caused permanent disabilities.

Your award, whether via settlement or a jury trial, could be in the millions. To make an apt comparison, the defendant is 45 and has been with the same insurance company for 28 years. His premiums are $1,000 per year. That is just $28,000 the insurance company collected on behalf of the defendant. However, the insurance company agreed to pay you $5 million because you will never recover from a traumatic brain injury you sustained in the accident.

That is quite a difference, and the insurance company wants to make it up somewhere.

Compensatory damages include economic and non-economic damages, including:

• Medical expenses.
• Therapy expenses, including physical, cognitive, occupational, and psychological therapies.
• Lost wages.
• Loss of future earning capacity.
• Replacement or repair of destroyed or damaged personal property, including your vehicle and items of value inside the vehicle.
• Death-related expenses if you lost a loved one in a car accident.
• Pain and suffering, including emotional distress.
• Loss of quality of life if you have to make life changes, such as taking prescriptions or using ambulatory aids for the rest of your life.
• Loss of consortium or companionship.
• Inconvenience if you have to hire someone to do your normal chores, including lawn maintenance, home maintenance, grocery shopping, and house cleaning.
• Amputation of a limb or digit.
• Excessive scarring or disfigurement.

Adding punitive damages, which the court only orders if the defendant’s behavior was grossly negligent or intentional, could add hundreds of thousands to your claim.

Even if the defendant is 100 percent at fault for the accident, you could see increased rates because the insurance company raises rates across the board and figures that you are more of a risk to it.

If you suffered injuries or lost a loved one in an accident, contact a car accident lawyer as soon as possible for a free case evaluation.