How much does car insurance increase after a car accident?

By Martin Pretorius 

Nobody enjoys lodging an insurance claim. Not only will you have to deal with assessors and call centres, but there will invariably be some legal palaver accompanying your claim as well. But, in the event of an accident or a similar large-loss occurrence, you will need to recover some of your damages, and that's the coverage which insurance is supposed to provide.

Don't think that doing so will come without some cost, though – just like you, insurers also get unhappy at the thought of shelling out money, and that cost will eventually come back to you in some way. At the very least, you'll be staring at an increased insurance premium.

It's a risky business.

There's a simple principle at play: the moment you claim from your insurance, you're showing them that your risk profile has worsened, which means that you should cost more to insure in the future. And, while some insurance companies boast that your premium will not increase following a claim, in reality, it will go up wherever you are insured.

The only possible exception to this would be if you could prove that your claim didn't result from any negligence on your part, but even then, you will be flagged as a “high risk driver” on insurance databases across the industry. It's unfair, but that's the nature of the business. And, of course, if you represent a higher risk, the insurers are presented with an excellent reason to increase your premiums.

How large an increase would they enforce?

There are too many variables at play to give a definite indication about your premium increase, but in many cases, increases of up to 40% have been noted. This is probably somewhat excessive, but it's worth remembering that insurance companies do their calculations based on worst case scenarios.

There's still some room for negotiation.

All is not lost, however. Even though you may now be flagged as a high risk driver, there's still some wiggle room. This would be a great time to switch insurance companies, in fact: a different insurer will often be eager enough to get new business, that they will overlook your worsened risk profile for a while.

Doing so will most likely have them offer you insurance at a similar rate to what you have been paying, at least for the first year. And then, after a claim-free year while on the new company's books, your risk profile will already have improved sufficiently that you may be able to avert a larger-than-inflation premium hike.

Know your policy and your rights.

While the insurers definitely wield the power in your business relationship, it's still worthwhile talking to them about your specific case. In most instances, the worst case scenarios applied by the insurance company can be mitigated if you point out discrepancies in the way your policy is being applied.

If you know the terms and conditions of your insurance policy, you may be able to use those terms to leverage a more-beneficial agreement: most insurers operate on a lowest-common-denominator principle, and most of their clients simply don't bother to query these terms, which is why many insurers keep on getting away with over-charging. Don't be afraid to contact them and talk to someone with decision-making powers, as this may just end up salvaging your premium situation.