Personal Finance > Insurance
But it wasn't my fault!
You weren't at fault for that car accident. So why did your insurance premium hit the roof?
July 1, 2002: 1:46 PM EDT
By Annelena Lobb, CNN/Money Staff Writer

NEW YORK (CNN/Money) - Even the best driver in the world (and, of course, that means you) can get into an accident. Still, if it wasn't your fault, you don't have to worry that the accident will push your insurance premium sky-high.

Or will it?

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Here comes the bad news: Even if you're not at fault for the crash, your auto insurance may end up costing you more at renewal time. You're certainly less likely to be penalized than if you had caused the accident, but it could still happen.

One reason has to do with the concept of "risk." Risk is simply the likelihood that you will, at some future date, file a claim on your insurance policy.

It may sound strange, but insurance companies can reliably measure risk by looking at things that would seem to have nothing to do with people's driving skills. Students with good grades are less likely to cause accidents than students with bad grades. People with good credit histories are better risks than those with bad ones.

Here's another: Someone who has been in an accident that was not their fault is more likely to become involved in another accident than someone who has not been involved any accidents at all, said Jeanne Salvatore, vice president of consumer affairs at the Insurance Information Institute.

Pointing fingers

In some cases, even if you don't think the accident was your fault, and the policeman on the scene agrees with you, the insurance company may hold you to a higher standard.

State Farm Insurance, for example, looks at what they call "chargeable accidents" -- or accidents they think the claimant could have avoided. Those are charged against the driver's record. If you're rear-ended, it's unlikely to be a chargeable accident in most circumstances, said Dave Hurst, a spokesperson for State Farm. But every situation is different. For example, if you were rear-ended after slamming on your brakes because you were lost and about to miss a turn, your insurance company might consider that "chargeable."

"Decisions are always made on a case-by-case basis," Hurst said.

In a no-fault state, like New York of Florida, drivers who are in "minor" accidents (damage up to a threshold set by the state) file claims with their own insurance companies regardless of which driver was at fault. State law prohibits from suing the other driver's insurance company.

Even though you weren't at fault, "filing a claim could negatively impact your premium," said Salvatore.

Other factors

It usually takes more than just one accident you didn't cause for your rates to go up, Salvatore said. If you see your premium go up, there may be other factors at play. Insurance prices may have risen statewide, or your own circumstances could have changed. If you've added another driver to the roster, changed addresses, or cars, your premium could go up (or down) regardless of your driving record.

If you had an automatic discount for remaining crash- and/or citation-free over a long period, you could lose it when it comes time to renew your policy after an accident, said Don Griffin, assistant vice-president of business and personal lines at the National Association of Independent Insurers, an insurance trade association.

You're less likely to lose that discount if you aren't at fault, but sometimes a discount is categorically removed if you're in any kind of accident. If state law is silent on the issue, Griffin added, insurers are free to make their own rules.

Sea changes

Another possible reason for rising prices is a change in the information you gave to the insurance company at the time you took out the policy. After an accident, insurers typically check in to make sure all the information they have about you is up to date. If your commute has gotten longer, you've changed cars, or added a teenage driver to the family roster, that change, along with the crash, could push prices up.

Even a drop in your credit score, said Bob Hunter, director of insurance for the Consumer Federation of America, is something insurers may take into account.

And even if your circumstances don't change, the insurance company's might. A statewide premium increase around the time of the accident, would raise your prices regardless, according to Hurst. According to Salvatore, rates are steadily rising now.

What not to do

Whether you're at fault or not, don't let the possibility of an increase in premium prices deter you from filing a claim, Salvatore said. If you are in an accident with another person, it's best to let your insurer know, just in case the other person tries to sue you. Should they file a lawsuit against you, they'll be on the horn to your insurance company's lawyers. (If the lawyers respond with "what accident?" you'll be in a lot of hot water.)

"The only time you shouldn't file is if the accident doesn't involve another person, you don't have to deal with comprehensive or collision coverage, and if it's a small loss," said Salvatore said. "If you hit something on your property and do minor damage, say, then it's okay. Your own stuff can't sue you."  Top of page