We cannot control the actions of another driver. This basic fact should come as a surprise to no one, including insurance companies. That is why when you are in a car accident that was not your fault, you do not expect your car insurance premium to rise.
However, according to the Consumer Federation of America, a consumer advocacy group, many insurance companies automatically increase the premium of drivers involved in a car accident, regardless of fault.
The practice is widespread
According to the Consumer Federation of America, the rise in annual premiums after a car accident can be as substantial as $400. The group released a report analyzing car insurance premium quotes in 10 cities from five big auto insurers in the United States. The only cities where the rates did not change were Los Angeles and Oklahoma City. Both California and Oklahoma have prohibited penalties against not-at-fault drivers.
The Consumer Federation of America found that Farmers and GEICO raised premium rates by at least 10 percent in some states. Progressive frequently penalized not-at-fault drivers in eight out of the 10 cities studied. Allstate applied not-at-fault penalties occasionally. State Farm was the only auto insurer studied that never increased premiums after not-at-fault accidents.
Why do insurance companies do it?
Key leaders in the auto insurance industry have argued that setting premium rates is complex and that it is important to look at a variety of factors, such as the driver’s residence, driving record, and type of vehicle. Industry officials note that while some insurers may view not-at-fault accidents as a factor, not all insurers do.
The National Association of Mutual Insurance Companies argues that there could be reasons other than not-at-fault accidents for a rise in premiums. Insurance rates vary widely from company to company, and all of them have their own factors and formulas for determining premiums.
Ultimately, of course, it has to do with maximizing profit.
Were you in an accident through no fault of your own?
Adding to your insurance premiums after a serious accident that was not your fault is adding insult to injury. You may already be facing significant medical costs, lost wages, property damage, and other expenses.
Insurance companies look after themselves first. It is the job of scores of highly trained professionals to determine when to pay out on a claim, when to raise premiums and how to maximize profit. Fortunately, an experienced personal injury attorney familiar with insurance company tactics can protect your rights after an accident.