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How Long Does an Accident Stay on Your Record?

Finance | 11/07/2022 23:00

There are a lot of costs associated with driving. Not only do you have car payments, maintenance, gas, and parking, but you also have the added expense of insurance. Your insurance rate is based on many factors, but one big factor in this number is your driving history.

Getting into an accident can drastically affect the insurance rate you will have to pay. And if you are struggling with all of your car costs, this can really throw your finances for a loop.

Here’s how long an accident stays on your record and how you can ensure an accident doesn’t derail your financial wellbeing.

Vehicle after a car accident

How long does an accident stay on your record?

If you get into a car accident, it will stay on your driving record forever. But that doesn’t mean that it will affect your insurance rate forever. While the DMV will keep this information on file, insurance companies are only allowed to see the past seven years when determining what insurance rates they will offer. In general, an accident will affect your insurance rate for three to five years.

Accidents and tickets will cause your rates to increase because insurance companies will see you as an increased risk. The more accidents and tickets you have, the more likely you are to file a claim (and the more likely they are to have to pay for you). In fact, insurance companies raise premium rates an average of 42% following an at-fault accident. If the accident is severe enough or involves drunk driving, your insurance company might choose to deny your renewal altogether. 

What about accidents where you're not at fault? This depends a lot from state to state, and your rate might increase even if the accident was no fault of your own. Some states, like California, make it illegal for insurers to raise your rates after a no fault accident, but this is not always the case.

Some insurance policies will have accident forgiveness. This coverage means that if you get in an at-fault accident, your insurance will not increase (the first time, anyway). There are different eligibility requirements for each insurer, and some may not even offer accident forgiveness. But if they do, it’s worth looking into. Be aware however that if your current policy has accident forgiveness and you switch insurers, your accident may affect the rates you are offered by new insurers. In other words, your accident forgiveness doesn’t transfer.

How can I lower car insurance after an accident?

A car accident can cause a sharp raise in your insurance rates. But there are certain measures you can take to help lower your car insurance. Car insurance discounts can be broken down into five categories: 

  1. Driver Status Discounts

  2. Driver Safety Discounts

  3. Policy Discounts

  4. Vehicle Discounts

  5. Usage Discounts

Driver Status Discounts

Many insurers offer discounts to drivers based on their age or profession. Some of the most common driver based discounts are:

  • Young driver discounts: Discounted rates for drivers between the ages of 16 and 25 (discount rate varies)

  • Military discounts: Discounted rates for active and retired military members–and sometimes their family members (8-15% discount)

  • Student discounts: Discounted rates for high school and college students (5-25% discount)

  • Professional discounts: Discounted rates for certain professional groups, such as teachers or healthcare workers (2-10% discount)

  • Organizational discounts: Discounted rates for members of certain organizations or alumni groups (2-10% discount)

  • Senior discounts: Discounted rates for drivers over the age of 55 (5-10% discount)

Driver Safety Discounts

Good driving habits and practices can save consumers a lot of money. Being accident free is one of the most effective driver safety discounts, but if you have been in an accident there are other available safety discounts. These discounts will vary from insurer to insurer but some of the most popular ones include:

  • Defensive driving discount: Taking a defensive driving course from a registered driving school can help reduce insurance costs (10-15% discount). If you are in an accident, participating in a defensive driving class can help minimize the price increase on your insurance policy.

  • Low mileage and low usage discount: If you do not drive a lot and do not put a lot of miles on your car, you may be eligible for additional insurance savings. Driving less than 7500 miles per year can save you up to 20% on your insurance.

Policy Discounts

There may be specific discounts built into your policy that can help save you even more money.

  • Bundling discount: If you bundle your car insurance with other insurance you have, such as renter’s insurance or homeowner’s insurance, you may be offered a discount (5-25% discount).

  • Early signer discount: If you renew your policy before it expires you may be eligible for a small savings discount (typically around 3%).

  • Pay in full discount: If you pay your yearly premium up front rather than in installments you may be offered an additional discount (5-10% discount).

  • Loyalty discount: If you have been a repeat customer for several years your insurer may reward you with additional savings.

  • Autopay discount: If you enroll in autopay you may be eligible for an additional discount.

Vehicle Discount

Some features on your vehicle may make you eligible for additional car insurance savings. Having any of the following features can save you anywhere from 3% to 30% on your insurance.

  • Anti-theft devices

  • Anti-lock brakes

  • Daytime running lights

Additionally you may be offered a discount if your car is new.

Usage Discounts

Many insurers these days are using tech to track your driving habits, and this can lead to big savings. Allstate Drivewise, Progressive Snapshot, and Travelers IntelliDrive are just three of these programs. These companies give you a device that plugs into your diagnostic system and tracks different usage metrics such as speed, braking, mileage, time of day, and time spent driving. These companies boast savings of up to 30% on your insurance, but research indicates that the average savings is between 6-8%.

How can I keep my car payments low?

If your insurance increases after an accident, there are a number of things you can try to reduce your insurance payments. But you can also try to reduce your vehicle costs in other ways which can help ease the burden of an insurance increase. And one big way to do that is to lower your monthly car payments. There are two main ways you can do this. You can try talking to your lender and seeing if you can work something out, or you can refinance your car loan.

Talk to Your Lender 

If you are in a tight spot, you may have luck simply calling your lender and explaining your situation. While they will not be able to amend your existing loan, they may help you defer a payment (or a few months of payments). They also may be able to lower your payments temporarily. This may give you the breathing room you need. But it’s important to note that you will almost certainly have to pay for interest on this in the long run, so it may not be very beneficial.

Refinance your Car Loan

A more effective way to lower your car payments and save money in the long run is to refinance your car loan. Car loan refinance is when you get a new car loan that will replace your existing loan. By finding a loan with a lower car loan APR and a different repayment plan, you can reduce your monthly car payments drastically. You may be eligible for a lower car loan APR if any of the following apply to you:

  • Your credit score has improved since your initial financing

  • The market rates have decreased since your initial financing

  • Your debt to income ratio has improved since your initial financing

Even if you are not eligible for a lower APR, adjusting your repayment plan may help you cut your monthly payments. And if you have been in an accident and your insurance rates have increased, this might be exactly what you need. Let’s say your car payments were originally supposed to be paid off in 24 months. Your loan was for $20,000 with an 8% APR and your monthly payments are around $900. If you were to refinance to a 36 month repayment plan, your monthly payments would reduce to about $625, even with the same car loan APR. That is a huge savings every month that can really help you out of a tight spot. You will end up spending a bit more over the life of the loan since you will be paying interest over a longer period of time, but it might be worth it to have that extra breathing room.

Having an accident can affect your insurance, but researching and participating in other insurance discounts can help minimize the damage.

An accident can certainly create a kink in your finances, but refinancing your car loan is one way that you can free up some money. Contact Auto Approve today to see just how much money you could be saving every month!


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