Man Shocked to See Car Insurance Price Increased 25 Percent

A minor fender bender can cause your car insurance rate to skyrocket by 25 percent or more.

That's something Louisiana father Steve Martin learned after his daughter Sophia got into a minor accident and his insurance premium jumped.

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"I knew it might go up, but I didn't think it would go up this much," Martin told Bankrate.

Martin was especially shocked because he was under the impression that the accident was not considered to be his daughter's fault, so insurance rates should stay the same.

"The police officer said that he wouldn't write my daughter a ticket and that the accident was nobody's fault," Martin said, adding that the incident occurred in a private parking lot.

However, if you get into an accident and the insurance company considers it your fault, Bankrate estimates that the average cost of full-coverage car insurance will be $3,299 yearly, a 43 percent increase from drivers who have never been in an accident. In exact numbers, that's an average hike of $82 per month.

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Unfortunately for drivers, insurance companies consider a wide range of accident causes to be the fault of the driver, even if it's not entirely fair. That includes skidding on ice and swerving to avoid a collision.

When the crash happened, Martin was paying $500 monthly to insure three cars and three drivers. Now, that number has soared to $630, roughly a 25 percent increase.

"Sophia's a great kid, much better than I was at her age," Martin said. "She keeps her grades up and kicks in money from her part-time job to help pay for the rate increase."

But for many Americans dealing with inflation on everything from groceries to housing, that upcharge is too much to handle after a car accident. It causes some to go without car insurance at all, but the out-of-pocket expenses of a crash can quickly send you into financial disrepair as motor vehicle repair costs are 45.7 percent higher than just four years ago.

In the aftermath of the COVID-19 pandemic, more Americans are on the road, and their car insurance costs are reflecting those increased risks.

"Seeing surging car insurance rates after a wreck is nothing new, but the dramatic increases we're seeing now post-accident are enough to put a financial strain on automobile owners that could last for a while," Alex Beene, a financial literacy instructor at the University of Tennessee at Martin, told Newsweek.

"Every expense with owning, operating, and repairing a car has gone up, and that means insurance companies are able to justify raising rates for what they anticipate will be higher costs to get your vehicle fixed or completely replaced. And if your insurance company sees an accident as making you more of a liability, you're going to pay more for it now than ever before."

Premium increases tend to last at least three to five years as a way for the insurance provider to feel more protected in case of another car accident under your policy.

Experts say drivers concerned about their rates being hiked after an accident can choose accident forgiveness policies, but there can still be slight price jumps if you find yourself in a crash. Beene said to document every aspect of the crash and follow all proper procedures.

"If it wasn't your fault, you can plead your case to your insurance provider, even if it may fall on deaf ears," Beene said.

One of the most important things, though, when it comes to premium increases, is to shop around with insurance providers.

"You're still more than likely going to pay some uptick in costs because of the accident, but other providers eager to get you as a customer could offer you a lower base cost to soften the blow," Beene said.

If you've had your insurance rates increased after a car crash and would like to share your story, please reach out to personalfinance@newsweek.com.