Unfortunately, car accidents are more common than they should be, especially when you consider that they are one of the leading causes of death around the world. Even when car accidents are bad enough at the moment of occurrence, they also have a lasting impact on survivors.
Many people fail to understand how big of an impact a car accident can have on your financial health. While it doesn’t directly impact your credit score, it can create conditions that may make it significantly more difficult to maintain it. Here are some of these conditions:
Increase in Car Insurance Premiums
Car accident claims can increase your insurance premiums, even when you’re only partially at-fault. This is because if you’ve caused an accident, your insurance company will tag you as a high-risk client.
The reason behind this increase in your premiums is that insurance companies need to evaluate the risk that an insurance policy holder has of getting into an accident. The goal of any insurance business is to ensure that the premiums they collect will always be higher than their insurance payouts. This is why they deem it necessary to make certain adjustments on the premiums of high-risk clients.
Even the smallest increase in your insurance premiums can add up to a hefty amount. This increase in premiums will be much higher if the accident was so severe that you need a new car. While this may not affect your credit score, this increase in expenses will affect your ability to pay for other bills.
Hefty Fines and Medical Bills
Another effect of car accidents is that they cost a lot of money to recover from. Depending on the extent of your injuries, your medical bills could vary, and in more severe cases you may even end up with a recurring medical expense.
While it’s true that you can sue for damages, lawsuits can take years to resolve, and you may have already suffered financially. This is why it’s important to hire seasoned car accident lawyers to get your lawsuit resolved as quickly as possible, especially since you need to get fair and full compensation as soon as possible.
Costs of Repairing or Replacing Damaged Vehicle
Repairing a car can be expensive, and replacing a car even more so. Even if you have an emergency fund, having to deal with such a hefty expense so suddenly can significantly affect your financial health. If your car was totalled, you may even have to pay for the remaining balance if it still wasn’t fully paid off. This can eat away at your budget and may even deplete your savings, which will affect your ability to manage your credit lines.
Thankfully, there are many ways to help protect against such a sudden financial burden. Besides having an emergency fund, you may want to consider getting a loan to help you get through your expenses, especially if there’s a significant gap between the period of the accident and the settlement.
If you already have a good credit score, you’ll have access to all these options that will prove valuable options for mitigating the financial impact of your accident.