Why Do Insurance Rates Increase After One Accident?

You know why insurance rates increase after just one accident?

Well, the insurance company needs to somehow recoup the money that they just paid out to fix your car, silly-head.

Actually, that’s not true.

Seriously, despite popular belief, it really isn’t true.

Covering future accidents

When an insurance company calculates your rates, what they are really doing is trying to figure out how much you, and all drivers like you, need to pay to cover future accidents.

The keyword here is “future.”

And, how do they calculate how much they need to cover future claims? Well, the past is a good indicator. Driving experience is taken into account. Accidents are taken into account. Convictions are taken into account. Your past behaviours are one of the best indicators of what your future behaviour is likely to be like. People that have had tickets in the past probably don’t follow the rules of the road to the tee. People that have had accidents in the past might make those same types of mistakes in the future.

Perhaps that’s not fair, right? I mean, people change.

Well, until we find a way to accurately predict the future for each individual driver, insurance companies will take their past behaviour into account when calculating rates.

So ya, one accident does increase your car insurance rates.

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