Most car insurance companies use advertising that focuses on their accident forgiveness or safe driver discounts. Accidents significantly influence annual car insurance rates and the presence of accidents on a driver’s record may mean the difference of hundreds of dollars in annual premiums. A recent study found that automobile insurance rates in Pennsylvania increased 11.6% after an accident, which was significantly lower than other states like Massachusetts where rates increased 14.8%. Based on the study’s analysis of four carriers, the average annual premium in Pennsylvania was $585 for a basic policy.

When motor vehicle accidents occur, the drivers who are involved in the accident are typically subject to an increase in their base car insurance premium. Insurance companies continuously scrutinize the records of drivers to adjust their insurance rates. Once involved in a car accident, a driver’s record is subject to immediate review by an insurance carrier, with the likely result being an increase in rate based on the extent of fault. Rates may even increase for drivers that are completely faultless in an accident.

Insurance carriers are risk-averse and tend to view accident participants, regardless of fault, as a higher risk. After an accident, companies examine certain factors such as fault, severity of the accident, the total cost of damages, and the driver’s age to determine new insurance terms. It is possible that rates may not even increase In the case of a minor accident or fender bender, as long as a driver has a clean driving record with no prior accidents.

Automobile policies typically include additional premium charges, also known as surcharges that carriers apply to an insurance policy for a limited term of years if a driver is involved in certain, defined moving violations, license suspensions or motor vehicle accidents. Surcharge information is specified in an insurance policy’s package of endorsements. Clearly, involvement in a motor vehicle accident has a negative effect on insurance rates, but there are limitations imposed by Pennsylvania law. Stay tuned for part two of this article about surcharges and the circumstances when insurance companies may utilize them in increasing drivers’ automobile insurance rates.