Steve Martin has maintained an insurance policy on all his vehicles for several years. However, he was shocked when his insurance company decided to hike his premium by 25 percent.
It turns out that Martin’s daughter, Sophia, got into a minor accident, and the insurance company thought it reasonable to increase the family’s premium.
A Small Car Scratch Could Get a Driver in a Fix
Due to the insignificant accident, Martin concluded that a small bumper scratch could do you in with an insurance company and raise your monthly expenses significantly.
Relating his dilemma with Bankrate, Martin said of his experience, “I knew it might go up, but I didn’t think it would go up this much.” His shock was piqued because the official report suggested Sophia was not to blame for the accident.
Getting Reprimanded for a Misdemeanor That Is Not Your Fault
Martin said, “The police officer said that he wouldn’t write my daughter a ticket and that the accident was nobody’s fault.” So, he was not expecting the insurance company to lay the expense on his plate.
Martin suggests that even if the insurance company thought it necessary to increase his premium for the minor accident, it shouldn’t be by a whopping 25 percent.
A Significant Hike in Insurance Premiums
According to Bankrate, the cost of an insurance premium policy for drivers who are at fault for an accident could go up by as much as $3,300 per annum.
The premiums charged to drivers who have never been in an accident are about 43 percent higher.
‘It Doesn’t Have To Be Your Fault,’ Says the Insurance Company
To give specifics, such post-accident hikes in insurance premiums may increase monthly payments by $85. However, it is unfortunate that drivers have to bear the brunt of some special niche of accidents, even when it is not their fault.
For example, accidents caused by swerving to avoid a collision or skidding on ice could be charged to the driver’s account. This is a standard policy for some insurance companies.
ALSO READ: Home Buyers Are Soft-Pedalling as Mortgage Rates Suddenly Spike to 8%
Getting a Premium Increase in the Next Bill
Before Sophia’s minor accident, which, by the way, happened in a private parking lot, Martin was paying a monthly premium of $500. This amount covered three cars and three drivers, Sophia included.
However, Martin’s next insurance bill after the accident became $630, a 21 percent increase to the total package. He does not think such a hike is fair, partly because the accident was not his daughter’s fault.
Responsible Kids Don’t Make Insurance Premiums a Headache
Martin thinks his daughter is a responsible kid and should not be discouraged from transitioning into a responsible adult by some unfair premium charges.
He commended Sophia, saying, “She keeps her grades up and kicks in money from her part-time job to help pay for the rate increase.” Martin feels Sophia is way more responsible than he was at her age.
Inflation is Affecting Almost Every Facet of Life and Existence
Unfortunately, many Americans are dealing with the hydra-headed realities of inflation. Price hikes are creeping into various domains of everyday life, from groceries to housing.
Thanks to hikes in the cost of insurance policies, some Americans just do away with it altogether. However, when they get in auto accidents, the recent high costs of repairs may plunge them into deep financial reverses.
More Americans Under Financial Stress
Post-COVID, the insurance cost seems to have increased across the board, probably reflecting increased risk.
A financial literacy instructor, Alex Beene, said of the new trend of premium hikes, “Seeing surging car insurance rates after a wreck is nothing new, but the dramatic increases we’re seeing now post-accident are enough to put a financial strain on automobile owners.”
Insurance Companies Capitalize on Increased Vehicle Maintenance Costs
Virtually every cost related to car maintenance, even outside of an accident, is about 45 percent higher than pre-COVID costs. So, insurance companies can use this justification when increasing the price of their premium coverage.
Beene says, “If your insurance company sees an accident as making you more of a liability, you’re going to pay more for it now than ever before.”
ALSO READ: A Woman in Washington DC Bought a Lottery Ticket, Won $135K, but Forgot All About It
Monitoring for Potentials of Becoming a Perpetual Liability
When your insurance company increases your premium, they tend to keep it that way for about three to five years. They are kind of weighing your liability score by checking if another accident occurs around that period.
If the driver stays safe on the road, then the insurance company may consider a downward review of the premium hike.
Look For Accident Forgiveness Policy in the Fine Print
Nonetheless, financial experts suggest exploiting the accident forgiveness policy of some insurance companies. So, if the insurance premium was increased for an accident that was not your fault, the customer could plead their case with the company. Beene, however, recommends keeping documentation of the incident.
These are some factors to consider when shopping around for an insurance policy provider.
You Might Also Like:
This Man Married His Wife Because of $100,000 and Regrets It
Should Americans Be Worried About the Longterm Integrity of Their Retirement Plans?
1975 Dimes Could Be Worth Half a Million Dollars, but There Are Things To Look Out For
What Could Cause a Potential Drop in Social Security Cost-of-Living Adjustment in 2025?