Car accidents can be devastating — not just physically, but financially as well. In the aftermath of a crash, a million worries may flood your head: How am I going to pay for this? Will insurance cover repairs? Does this mean my premiums will go up?
Of course no one expects to have a traffic accident, but here’s a look at steps you can take before and after to minimize your out-of-pocket costs.
Before an accident
Check your insurance coverage.
Pat Keefe, vice president at the Credit Union National Association, suggests periodically reviewing your auto insurance policy to make sure it still meets your needs. “Now and then, take it out and look at it so you know what’s covered and if towing is covered,” he says. Some policies exclude damage caused by potholes, so make sure you understand any exclusions and budget accordingly just in case. Lowering your deductible will reduce your out-of-pocket costs should you have to file a claim, but it will also mean higher premiums.
Practice safe driving habits.
Obeying the speed limit and avoiding distractions won’t prevent every possible accident (after all, other motorists may run a red light or drive while intoxicated), but it certainly helps. As they say, an ounce of prevention is worth a pound of cure. Several states have laws against texting or using a cell phone while driving, and you could be fined even if you don’t cause an accident.
Prepare an emergency kit.
“We recommend that people have an emergency kit in their car that includes a pad of paper and a pen, a cellphone, flashlight, auto insurance cards and emergency phone list,” Keefe says. You may also want to write out medical information, such as allergies, in case of a serious accident. Jumper cables, traffic cones and a spare tire are also a smart idea (if you purchased a used car, don’t assume that the trunk is already stocked with a spare tire).
After an accident
Contact your insurer.
After you’ve gotten out of your vehicle, exchanged information with the other driver(s) and contacted police and paramedics (if necessary), contact your insurance company. If you need to have your car towed, tell your insurer where the vehicle is. “Even if the accident appears minor, it is important that you let your insurance company know about the incident,” says Insurance Information Institute spokeswoman Loretta Worters. “Your insurance company will require what’s known as a ‘proof of claim’ form and, if there is one, a copy of the police report.” Many insurers now allow you to file a claim and monitor the status of your claim through the insurer’s website or mobile app.
Keep good records.
Keefe suggests taking photos of the accident scene to provide to your insurance company if needed. “If you don’t have a camera, you can diagram,” he says. Even if you don’t think it’s necessary to call the police, having a police report as a paper trail may be helpful in case your insurance company or the other motorist’s insurer denies the claim. Also make sure you have contact information and insurance information for any other drivers involved in the accident.
Don’t assume your premiums will skyrocket.
According to Worters, filing a car insurance claim doesn’t automatically translate to higher premiums. “Your insurer considers many factors before deciding to adjust your rate,” she says. “This includes the severity of the incident and your driving history. If you haven’t had a ticket or incident in a few years, a minor fender bender may not impact your rates. Also if you’ve been with the company a long time, your insurance may not increase.” If you live in a no-fault state, your insurance company may have to pay a portion of the claim regardless of the accident’s cause. “That means it’s more likely that rates will go up after a claim, though perhaps not as much if you have been a good driver,” Worters adds.
Some insurers offer one-time accident forgiveness for small claims. But if you were at fault because you were driving recklessly or under the influence of drugs or alcohol, you can typically expect a rate hike or possibly even a cancellation of your policy, Worters says.
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