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Insurance

Moving insurance can be tricky. Learn more details here.Accidents can happen in seconds -- but the damage to your auto insurance premiums can haunt you for a long time.

Practices vary from one company to the next, but in general your premium will rise by a specific percentage for each claim that your insurer considers primarily your fault.

Depending on the insurer, at-fault accidents can remain on your record between six to 48 months and could mean that you are paying a higher premium during that time, notes Madelyn H. Flannagan, vice president for education and research at the Independent Insurance Agents and Brokers of America, Inc., a trade group.

If you have three or more at-fault accidents or moving violations within a 24-36 month period, news is even more grim: Your insurer may choose not to renew your policy.

Penalties vary, but here's what happens at large insurance company State Farm: At one extreme, if you've gone at least 10 years without a chargeable claim, there's no effect on your premium, according to spokesman Dick Leudke. At the other extreme, if you have an accident within the first year of your policy, you'll pay a higher premium when it comes time to renew the policy. Leudke says the cost of liability insurance, which typically represents 40% of your premium, will go up, as will the cost of personal injury coverage and collision, which covers the damage to your car.

The first time, the cost of all three types of coverage will go up 10%; the second accident, another 30%; and the third time, an additional 50%. So after the third accident the cumulative increase in the cost of liability, personal injury and collision insurance will be 90%.

Leudke says a chargeable claim won't have any effect on the cost of comprehensive coverage, which typically represents 15% of your total premium and covers items such as theft, weather, or hitting deer, which have little to do with your driving performance.

To completely go away, you must go 10 years without another chargeable claim, although some companies start bringing the premium back into line in a shorter time frame.

Of course, your insurer can't raise your car insurance premium if you don't report the accident and submit a claim. If the damage is relatively limited, you may think you're better off paying for it out of your own pocket.

However, if you do so, you're assuming a substantial risk: the other driver could still sue you, in which case your failure to report the accident might cause your insurer to refuse to honor the policy, according to information posted on the website of the Insurance Information Institute.










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