Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health insuran...

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Chris Harrigan has an economic degree from Limestone College and an MBA from Clemson University. He previously managed auto insurance claims for Enterprise Rent-A-Car. Currently, he is using his business and insurance expertise to provide insurance data analysis and visualizations to enhance the user experience.

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Reviewed by Chris Harrigan
Former Auto Insurance Claims Manager Chris Harrigan

UPDATED: Oct 14, 2020

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Key takeaways...

  • If you have an auto accident, you need insurance if you want help paying for damages sustained in the loss
  • When you file an accident claim, it’s possible the claim could affect you if you’re found to be liable
  • At-fault claims won’t affect the status of your current policy immediately unless you’re found guilty of fraud
  • If your insurance company doesn’t want to do business with you after the term, you’ll get a non-renewal notice
  • If your policy isn’t renewed, you can get insurance elsewhere but you may pay higher rates for being a high risk

As the saying goes, accidents happen. You could be the most cautious driver in the country, and you’d still be at risk of being sideswiped or rear-ended unexpectedly.

Since you’re likely to have a claims-worthy accident at least twice in your lifetime, you’ll need to understand what kind of impact an accident can have on your future.

Having car insurance can help you pay for your car’s cosmetic damage, mechanical damage, and third-party damages as well.

Unfortunately, when you file a claim against your policy for anything from a serious wreck to a minor fender-bender, it can affect your relationship with your insurer.

Don’t end up in a car accident without insurance! Compare car insurance quotes today!

Are you required to file a claim after you have an auto accident?

After an accident, it’s tempting to convince the other party to handle everything without involving the police or either insurance company. If you’re trying to avoid a rate increase, one way to do so would be to arrange a private settlement where you agree to pay for damages out of pocket.

While private settlements aren’t recommended, they are allowed as long as you notify the insurer that you had a loss. It’s your duty as a vehicle owner and a named insured to tell your own insurance agent that you’ve been involved in an accident.

You’ll have to tell the carrier where the accident happened, when it happened, and how it happened. If you’re not interested in filing a claim at that time, you won’t need to give other details.

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Will it affect your policy when it’s a not-at-fault claim?

Before you make any rushed decisions to settle your claim privately, you need to understand how filing a claim even has an effect on your insurability. The only time it makes sense to pay for your damages out of your pocket when you’ve had an accident is when you’re definitely going to be found at fault for the loss.

If there’s no denying the fact that the other driver was at fault for the crash, filing a claim won’t affect your rates in most cases.

As long as you’ve only had one or two non-fault claims in the last few years, filing a non-fault claim won’t affect your policy.

If you have three or more within the last three-year period, you could fall into a higher risk bracket.

Know How Filing an At-Fault Claim Can Impact Your Policy

If you rear-ended someone or your last-minute decision behind the wheel is what led to the accident, you should familiarize yourself with the effect that the claim could have on your current insurance policy.

There are times where it’s in your best interest to pay for minor damages on your own, but there are other times where it’s best for the sake of your financial protection to file a claim.

At-fault accident claims can affect your policy in numerous ways. If you were the driver and you have a clean record, you could lose out on discounts you’ve been receiving for years.

If someone else was driving your car and they weren’t on the policy, you could be forced to add them to your policy and pay the price. Some of the consequences could include:

  • Losing a Good Driver Discount if you already have an accident or a ticket on your record
  • Losing your accident-free or claims-free discount no matter how much damage is sustained in the loss
  • Receiving a surcharge for the accident, regardless of how much is paid out as long as it exceeds the state’s reporting threshold
  • Your accident claim surcharge affecting your rates for 36 months with your current insurer or a new carrier you might switch to
  • Being bumped into the higher cost risk group if you’re in a preferred or standard risk class
  • Being required to add the driver for a higher premium if the driver wasn’t listed on your initial policy
  • Signing a driver exclusion for unlisted drivers if you don’t want them rated on your policy
  • Your current insurance policy not being renewed if you no longer qualify for insurance under the underwriting requirements
  • Having to file an SR-22 with your state, which leads to higher premiums

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When will the accident claim impact your current insurance policy?

Your insurance agent won’t call you up days after your claim and inform you that your rates have increased after your accident, which, fortunately for you, isn’t how insurance premium increases work even after claims are filed.

You will have some time to save up for the rate increase or to plan for any action that’s taken next.

Your rates are guaranteed for the entire time that your term is valid. If you have a six-month term, your current rates are going to stay level for the remainder of the term as long as you don’t voluntarily make changes.

Even when you make a change to your policy, your risk class will remain the same until the expiration date.

You won’t be charged for your new risk class until the next term is run. The new premiums will be calculated once your renewal starts.

When the renewal is being processed, the underwriter will look at your claims record and your motor vehicle record to see if you’re still eligible for coverage and how much you’ll have to pay for the new term.

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What happens if you aren’t asked to keep your current policy?

If you’ve had bad luck in the past few years, there’s a possibility that your carrier won’t continue your policy. When there’s no offer to extend your coverage, the company will send you a notice in the mail. The notice is called a non-renewal notice.

It will say when your coverage expires, why the policy is being ended, and what you can do to avoid the non-renewal.

Will you be able to find insurance with another carrier if you’re non-renewed?

After you get a notice of non-renewal in the mail, it’s your job as a vehicle owner to find a policy with a new carrier before your coverage expires. If you don’t find coverage before this time, you will be uninsured and in violation of mandatory insurance laws.

Being in violation of mandatory insurance laws can result in major penalties.

You might not be able to keep your coverage with your current carrier because of their underwriting guidelines, but there will be an insurer with more lenient requirements. Some of the time, the only option is to buy coverage from a sub-standard insurance company that targets high-risk drivers yet charges high-risk premiums.

You Have the Right to Buy Insurance

As long as you are eligible for a driver’s license, you’ll be eligible for insurance. Buying auto insurance is your right as mandated under the Consumer Bill of Rights.

If you’re unable to find a policy that you can afford, see if there are government-sponsored insurance programs that you can qualify for even after having an accident.

Accidents can affect your insurance rates with any company.

If you’re not being offered the option to keep your insurance or you’re not happy with your renewal rate, you need to start shopping around.

Comparing rates may be time-consuming if you do it the traditional way, but you can get online quotes instantly in a matter of minutes. Enter your personal information, compare rates, and get insurance as soon as the renewal begins.