How a Hit and Run Incident Affects Your Auto Insurance – You Might Be Surprised

A ‘Hit and Run’ Can Affect Rates.

Unfortunately, ‘Hit and Run’ accidents are a fact of life on the road. Hit and Run incidents are car accidents where one or more parties fails to stop, provide information, and render aid when necessary. In other words, if you have an accident with another vehicle and drive off – even if the other car was parked – you were involved in a Hit and Run accident.

There are many Hit and Run incidents every year on US highways. According the National Highway Traffic Safety Administration (NHTSA) in 2003-2006, one in eight accidents were Hit and Run. It’s estimated there are over 700,000 Hit and Run incidents every year in the United States. If you haven’t been involved in one yet, chances are you will be in one in your lifetime.

There are two parties in a Hit and Run accident: the person “hitting and running” and the other driver and/or car. Hit and Run accident affects both party’s auto insurance rates differently.

Rates For the Person “Hitting & Running”

If you caused an accident and drove away, you are responsible for a hit and run – even if the other vehicle was unoccupied. If the accident is ever traced back to you, then your insurance could charge you with an at-fault incident. This will probably be a surcharged incident which would result in higher premiums.

Hit and Run incidents are more serious than regular at-fault accidents. It could stay on your driving record for 5-7 years, depending on your state. If your insurance company discovers it’s a Hit and Run, they may also cancel your coverage. This would mean even higher premiums at your next carrier.

Every driver should know a driver’s responsibility in any accident – stop your car at a nearby, safe place, check on the other driver, and give them your information. If you drive off, you could be in more trouble than just rising insurance rates. If the victim is injured or dies as a result of the accident, police will investigate. If you’re guilty of a Hit and Run traffic death, the courts could find you guilty of felony manslaughter. You should contact an attorney in that situation.

Bottom line: if you’re involved in an accident, do the right thing. Stop, provide your information to the other driver, and render aid when necessary – regardless of who’s at fault.

Rates for the Victim of a Hit and Run

If you are the victim of a Hit and Run incident, your rates should be unaffected. Hit and Run accidents are common and insurance companies usually do not fault the other driver for the incident.

However, whether the incident will be covered is a different question. There are two coverages that would cover a Hit and Run: Uninsured/Underinsured Motorist (UM) and Collision. Insurance companies offer Uninsured Motorist coverage for times like these. Hit and Run incidents are covered minus your deductible in most cases. If you do not carry UM, then your Collision coverage should pick up the tab – minus your deductible. That’s one of the reasons you should carry UM or Collision at all times.

The particular coverage that would be used to cover your damages from a hit and run accident all depends on the state that you live in and also your insurance company you have coverage with.  For example, in the state of Washington a hit and run accident is covered under the UM coverage and you are required to file a police report. If the driver that hit you is identified the damage is still covered under the UM coverage, but you are subject to a lower deductible than you would be if the other driver was never identified. In the state of Idaho some carriers do not even sell UM coverage and all hit and run accidents are covered under the collision coverage.

Regardless, if you’re involved in a Hit and Run, contact your insurance company. They will provide the best advice for handling your claim. Depending on the severity of the situation, they could also provide legal counsel.

If you have experience with a Hit and Run accident, feel free to leave a comment.

What happens to your insurance rates when you have a wreck

Will you pay more for your insurance if you have an accident?

So you’ve had an accident – and you want to know if you’re going to pay more for your car insurance. Your auto insurance premiums could go up. But then again, you could pay the same. It depends on a number of factors. I’ve collected some helpful principles on whether auto premiums will increase after you have an accident.

Your Insurance Company

Your insurer plays the biggest role in determining whether your rates will increase. After all, your insurance company takes on your risk every month. If their actuaries say it’s now more expensive to insure you, you’re stuck with it. Not every actuary is the same. Where one company will tack on a 10% premium surcharge in a given accident, another company won’t do anything. That’s why I’ve included other factors that influence their decision.

Were You At Fault?

A big factor determining whether your auto premiums go up after an accident is if you were at fault. If you caused the accident and the damages were over a certain threshold (often $500 after deductible) a surcharge is likely. How much of a surcharge depends on the severity of the damage and your insurer. When I was an agent, surcharges came in 10% increments. Those surcharges lasted 3 years in most cases.

Another consideration: “At-Fault” is sometimes determined by percentage of fault. If you are 25% at fault in an accident, a surcharge is less likely compared to a person who was 75% at fault. Your state mandates whether at-fault percentages are a factor for surcharges.

It is possible for your insurance company to raise your rates even if you were not at fault. If that happens, the insurer weighs a number of factors, ex. number of claims, frequency of claims, severity of claims, longevity of customer. In other words, just because you weren’t at fault doesn’t mean your rates will stay the same.

Discounts & “Accident Forgiveness”

If you’re a good driver, you may be enjoying a good driver discount. However, an at-fault accident will probably eliminate your discount. Even if you don’t get a surcharge, you’ll pay extra premium if you lose your discount.

Some companies also offer “Accident Forgiveness.” This feature allows policyholders a “free” accident where the company will not surcharge you for an at-fault accident. Keep in mind – you pay for that option. Although it’s not the same price, it’s like prepaying on a premium surcharge. There may be additional limitations to that option, so read your policy.

What Can I Do If I Get Surcharged?

If you feel you’re getting an unjust premium surcharge, you can appeal to your state’s department of insurance. That action may reflect negatively if your policy comes up for renewal and you don’t want to be cancelled. Only take that step if you are confident in your innocence.

Also, you can always shop for a new policy. You could still save money even with an at-fault accident. Always disclose any incident if you talk to other insurers. It takes awhile for the an accident to show in their reports. They could cancel you if you fail to mention the incident when they discover it.

Three Steps to Improve Your Credit And Pay Less for Auto Insurance

How your credit will affect your car insurance rates.

All of us want to pay less for car insurance.  Sometimes it feels like we are pouring hundreds of dollars down the drain, especially when we go for years without making a claim.  So it makes sense to do everything you can to cut car insurance costs.

But there may be one thing you haven’t considered.

Many consumers cut costs by raising deductibles on comprehensive and collision coverage. Some may even eliminate collision coverage for an older car altogether.

Improve Your Credit For Cheaper Rates

Yet a less obvious way to get cheaper car insurance is to improve your credit score. Yes, that annoying number you see when you check your credit haunts you enough. But the reality is that it usually impacts your car insurance costs, too!

Your credit report reflects who you are.

In addition to showing your credit and payment habits, it has transformed into much more.  Your credit report now shows additional items, like where you work, how much you earn, how long you have worked in your present job, tax liens or judgments against you, and other things – information not seemingly related to your bill payment history.

Insurance Companies Use Credit To Determine Rates

As a result, many car insurance companies have jumped on this information.

Car insurance companies now have statistical evidence proving that people with lower credit scores make more claims. Insurers have convinced themselves that this statistic-while not true for every single driver-applies to a lot of people. In industry lingo, it’s called actuarial data.

But what does this mean to you?  Simple: If you have a low credit score, a car insurance company will infer a higher likelihood of making claims and, thus, charge you a higher premium.

Three Steps To Improve Your Credit

The best thing you can do is improve your credit score.  You should already be monitoring your credit and behave in such a way to maximize that number. But this insurance revelation should provide even more motivation for having a good credit score.

Here’s three steps to take to improve your credit and lower your auto insurance:

1) Get a copy of your credit report every year. Examine it carefully to make sure all the information is true and accurate.

2) Don’t assume that, even if you haven’t missed any credit card payments, your credit report will be fine. Many credit reports contain errors – some even report incidents for other people entirely. That’s why it’s important to check yours periodically.

3) Act in a way to keep your credit clean.

By taking these steps to improve your credit score, you’ll improve your chances of getting better financing on your house or car. In time, you should also pay less for your car insurance.

Four Questions To Ask Before Dropping Comprehensive And Collision On Your Vehicle

When To Drop “Full Coverage” On The Old Beater

Knowing when to drop full coverage auto insurance can be tricky. As your car ages, keeping comprehensive and collision coverage may not make sense. At some point, you could be paying more for insurance than what your car’s worth. Since you’re aiming to save money, it’s worth exploring when to drop full coverage. You may be wasting money by keeping it.

“Full Coverage” Is Physical Damage Coverage

Before knowing whether to stop carrying it, it’s good to understand what “full coverage” is. Full-coverage insurance is another way of saying comprehensive and collision – with liability coverage. Comprehensive coverage (comp) covers the physical damage of your car when not involved in a collision. Shattered windshields, vandalism, even hitting an animal could all be damage covered by comprehensive insurance.

Collision coverage is different. If you are involved in an at-fault accident, your vehicle could be damaged. Collision covers the physical damage to your own car if you hit another car, a telephone pole, or another object and the accident is your fault. Both collision and comprehensive make up “full coverage”. Check out our article on Full Coverage Auto Insurance for more information.

There are several considerations to make before dropping full coverage. Make sure you review these questions before contacting your agent.

Question #1: What Do You Owe On The Car?

If you owe money on your car, then your finance company will probably require you to keep comp and collision. If you lease your car it’s usually the same deal. Before you drop full coverage when you owe or lease, talk to your bank first. Otherwise, keep both coverages until you fulfill your financial obligation.

Question #2: What’s Your Replacement Cost?

Comprehensive and collision covers the physical damage to your vehicle. If your vehicle is not worth much, it may be time to consider dropping full coverage. For instance, if it costs $400 a year for comp and collision and your vehicle is only worth $1600, think about dropping it. In four years time ($400 x 4 = $1600) you could have paid for the vehicle with the comp and collision premium – assuming you did not make a claim. Still, consider your driving history and cash in the bank before you call your agent.

Question #3: Should You Drop Collision or Raise Deductibles?

Collision is more expensive than comprehensive. On my policy for this period, I’m paying $23.70 for comp, but I’m paying $53.60 for collision. Granted, I carry a $250 deductible on comp and a $1000 deductible on collision, but that’s still a significant difference. If you’re a safe driver, you may consider dropping collision on an older vehicle.

Instead of dropping full coverage, you could also raise your deductibles. By carrying a higher deductible, you carry more of the risk associated with driving. That’s why it’s cheaper to have a $1000 deductible versus $250. If you want to save money, but don’t feel safe dropping comp and collision completely, just raise your deductibles.

Question #4: What About Full-Coverage Peace of Mind?

You may be looking to save money. But if you get nervous driving down the highway without comp and collision, it’s probably not a good idea to cancel the coverage. An anxious driver is a bad driver. Even if you’re not normally edgy, dropping certain coverages can be unnerving. Before dropping full coverage, just make sure you’re comfortable with the new arrangements. You will save money – but you may lose sleep. Weigh your options and make an informed decision.

One final thought: you could also just cancel collision. Since comprehensive is fairly inexpensive, you might want to leave it on your policy – even if it’s an older vehicle. Comprehensive covers your car it’s stolen, a tree falls on it, and more. You may not have coverage for physical damage in an at-fault accident, but it would cover other unforeseen incidents.

What you should know about getting insurance for your new car

Don’t Forget Your Insurance Binder.

So you’re considering a new car – now it’s time to get new car insurance. After striking a bargain at the dealer, getting all the discounts, rebates, and other incentives, you’re ready to sign the paperwork. Before you speed off the lot with your new wheels, you need to get some coverage. Here’s what you should know about insuring that new car.

Do You Have An Existing Policy In Place?

If you have an existing auto policy, then your new car should be automatically covered. The same coverage on your current policy usually extends to the new vehicle. Typically, you have 14-30 days to inform your insurance company about the new purchase – depending on your state and insurer. Call your insurance company in the first couple of weeks after buying the new car. That way you won’t drive uninsured – the sooner you call the better.

Bear in mind, your current coverage may not be the same coverage you need for the new car. For instance, if you don’t have comprehensive and collision on your current policy, it will not magically appear on the new vehicle. Also, if you’re financing the car, the bank usually requires comp and collision to cover the note. They’ll need a copy of the insurance binder describing your exact coverage before you take the keys.

But I Don’t Have a Current Auto Policy…

If you don’t have a current policy, you need to pick up some coverage. Most states require liability insurance. If that’s the case, your dealer will probably require a binder before you drive off the lot. In addition, you will probably need comp and collision if you’re financing the car. Your insurance company can provide a binder that shows both types of coverage.

Don’t wait until you’re at the dealer to get a new policy. Sign up for coverage before you buy the car. You can always post-date the coverage with your insurer – that way you’re not paying for insurance before you need it.

As always, we recommend getting several quotes before you get a new policy. Prices fluctuate and vary across the industry and by driver. To get multiple quotes from our online quote aggregator, go to…

Get Quotes for New Car Insurance

Budgeting Insurance For Your New Car

A new car can be more expensive than you expect. Make sure you can afford the extra hundreds of dollars for the payment as well as the insurance for the new vehicle. Because it’s a newer car with more value, insurance tends to be higher. Also, if you buy a sports car, be prepared to pay a handsome sum to insure it.

Bottom line, budget for your new car. From payment, to gas mileage differences, to the extra cost for insurance – a new vehicle can be an expensive toy. Even still, it’s a fun toy.

Any thoughts about insuring a new car? Feel free to leave a comment.