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Do insurance rates go up after a no-fault accident? Here is what you should know.

Understanding the Rating Game

At its core, insurance is a betting game. You (the insured) are essentially making a recurring bet that you will need to file a claim and have the insurance company pay out. The insurance company is betting that you won’t.

Your premium is like the ante – the amount you pay at the start to make the ongoing bet. The insurance company then uses actuarial tables and complex algorithms to calculate how risky you are as a bettor based on factors like:

  • Your driving record
  • The insured vehicle’s crash ratings
  • Your age, gender, ZIP code
  • The coverages/deductibles you select
  • Other risk factors like annual mileage

Based on this risk profile, the company sets your premium rate – the higher your assessed risk, the higher your ante/premium.

When you file a claim, regardless of who was at fault, the insurance company has to pay out money. And like any entity engaged in recurring bets, they try to adjust the odds in their favor after a payout.

 

No-Fault Accident Insurance Impact: What Role Do do “No-Fault” Laws Play?

Many U.S. states have some form of “no-fault” car insurance laws. The way these work:

  • Each driver files a claim with their own insurer after an accident, regardless of who caused it
  • Your insurer pays for your damages up to the limits of your policy’s personal injury protection (PIP) coverage
  • You cannot pursue additional damages from the at-fault driver unless injuries exceed a certain threshold

The intention behind no-fault is to:

  1. Reduce litigation over minor accident claims
  2. Ensure prompt payment of damages
  3. Lower insurance premiums by avoiding fault determinations

In theory, no-fault laws make the question “Do rates go up after a no-fault accident?” more complex. They make it such that a rate increase becomes the most likely no-fault accident insurance impact. It is thus one of the factors affecting insurance rates after no-fault accidents.

Insurance companies should be less focused on assigning blame. However, many consumer surveys suggest rates often still increase after a no-fault claim based on the increased risk perception, even if fault isn’t explicitly assigned.

No-Fault Accident Insurance Impact: “Chargeable” vs “Non-Chargeable” Element

Most insurance carriers have an internal system for flagging accidents and claims as either “chargeable” or “non-chargeable” when calculating a renewal premium.

Chargeable accidents are ones where:

  • You are found to be at fault or partially at fault
  • The accident could have reasonably been prevented by you
  • The circumstances significantly increased your risk profile

These chargeable accidents virtually guarantee a rate increase at renewal as the insurer reassesses you as a higher risk.

Non-chargeable accidents, on the other hand, are ones where:

  • The accident was truly beyond your control (e.g. you were rear-ended at a stop light)
  • No violation was issued to you by the police
  • Your driving represented no negligence

For these “non-chargeable” no-fault accidents, there is no no-fault accident insurance impact. Essentially, the insurance carrier may be willing to re-rate you at the same risk level, allowing your rates to renew without an increase.

However, this is not guaranteed. Each insurer has its own system for evaluating chargeability and adjusting premiums accordingly. And many consumer surveys suggest that a rate increase is sometimes the no-fault accident insurance impact — even “non-chargeable” no-fault accidents often still lead to rate increases, perhaps simply due to the algorithm flagging you as a higher risk from the claim data itself.

The bottom line: Unless legally prohibited, insurance companies generally reserve the right to re-rate your policy at any renewal based on your updated risk profile after an accident, regardless of fault determination.

This brings us to a key strategic insight – if you are worried about a rate increase as a no-fault accident insurance impact, the best path is to be proactive in influencing the “chargeable” vs “non-chargeable” determination in your favor.

Protecting Your Policy From No-Fault Accident Insurance Impact

Here are the top recommended steps to avoid an insurance premium increase after no-fault accident:

1) Collect Exonerating Evidence Immediately

At the scene of any accident:

  • Take photos/videos from multiple angles documenting the positioning of vehicles, road conditions, traffic signals, etc.
  • Get contact/insurance info for any other drivers involved
  • Get names and numbers for any neutral third-party witnesses
  • File a police report and get the report number/details

All of this evidence can help prove you were not negligent and that the accident was “non-chargeable” on your part.

2) Contact Your Insurer Promptly

Notify your insurance carrier immediately after the accident, while details are fresh. Provide your account of the incident along with any supporting evidence.

Be cooperative, stick to just the facts, and do not admit any fault or guilt. Your goal is to get ahead of their assessment and steer them towards a “non-chargeable” determination before they make assumptions.

3) Avoid Filing Trivial Claims

Even if you have a strong “non-chargeable” case, think twice before filing a claim for very minor damages (like a small dent or cracked light cover). The mere act of opening a claim can be enough for the insurer’s system to flag you as a higher risk.

4) Shop Your Policy at Renewal

One of the best ways to avoid any challenges when it comes to the topic of no-fault accident and insurance rates is to simply shop around.

If your rates do go up after a no-fault accident, be diligent about shopping other insurance carriers for a potentially better rate. Even a small rate increase can justify switching companies to get a lower locked rate going forward.

Remember – Key Factors: 
Policy LanguageReview your policy details on “chargeable” criteria
State LawsResearch your state’s no-fault insurance regulations
Claim HandlingControl the narrative with your insurer from the start
Deductible StrategyAvoid reporting small, negligible claims when possible
Comparison ShoppingAnnual re-shopping can uncover better rates after a hike

At the end of the day, insurance companies will always try to squeeze more premiums out of you if they can justify it algorithmically. But you have more power than you may realize to influence the inputs into their little black boxes.

While a rate increase after a “no-fault” accident is certainly possible, it is not a guaranteed inevitability. With diligence and strategy, you can protect your policy and maintain affordable coverage even after an unfortunate accident that wasn’t your fault.

Just remember – when it comes to buying car insurance in the modern world, there is no “one size fits all” tunnel. You have to continually re-assess and re-strategize to come out ahead. Becoming a smarter, more sophisticated client is the best insurance against getting blind-sided by rate hikes down the road.

Contact Us

If you are facing challenges with your insurer and need help figuring out the next steps, we can help. At Husain Law + Associates — Houston Accident & Injury Lawyers, P.C., we specialize in helping people just like you get what they deserve.  Call us at (713) 804-8149 to get the help you need.

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