What is Accident Forgiveness and is it Worth it?

Many insurance companies are advertising accident forgiveness, but not everyone knows what that means or if it is worth it. Basically, accident forgiveness is part of your auto insurance policy that will allow you to be involved in an accident for any reason, but it will not raise your premium. Of course, to include this as part of your plan, it will also cost a little more and usually you will need a specific length of time where you have not had any accidents before accident forgiveness will go into effect. So, is it worth it? That depends on your past driving history.

If you are a safe driver and you have never had an accident in the last 20 years, you may not need this type of coverage. Some people live in a very safe location without a lot of traffic, or maybe they only drive their vehicle once or twice a week. In this instance, accident forgiveness may not be worth the extra money. Although, if you live in the city where there are frequent accidents, it may make sense to get this type of protection. Sometimes families will also choose to purchase this type of policy when their teenagers begin driving. Just remember, the policy must be in effect without accidents for a certain number of years before the accident forgiveness will go into effect.

Your situation will determine whether you need accident forgiveness insurance. Once you start searching for quotes on car insurance, you can see how much this type of protection will cost and whether it will be worth it to include it on your policy. Just make sure to compare the rates from several companies for the same amount of coverage. You can find a great policy and an affordable payment when you compare quotes online.

Accident Forgiveness 101

Accident Forgiveness sounds wonderful, especially for those of us who have an accident or two.  Here is a little insight to help you decide if this is the type of policy for you.  For a lot of people, price is the bottom line.  For others the security of knowing their premiums will not increase beyond their budgeted amount is important.

Did you already know that an accident, claim or moving violation would increase your insurance rates?  The insurance company can charge you higher premiums for 36 to 60 months depending on the insurance company, for a claim.

Accident forgiveness is offered by some insurance companies as a way to forgive an accident, claims or moving violations so that your rates do not increase.  The accident still shows up on your claims history, but is not counted as a rating factor or increase in your policy. Sounds great, doesn’t it?

Here are a couple of pointers when considering this type of policy:

Who is eligible for accident forgiveness?

  1. Many insurance companies will look at your driving and claims history.  Any many of the insurance companies will only offer accident forgiveness to those with a clear driving record, no tickets, no accidents, and no claims within a 3-5 year time period.  This time period varies depending on the insurance company.
  2. Some insurance companies will offer accident forgiveness to brand new customers, and some will require a longevity period with the company or require you to carry higher limits on your policy.
  3. Most likely, if you are willing to pay the additional premium to have accident forgiveness, there is an insurance company out there who will sell you a policy.

Accident Forgiveness Pros:

  1. Your first accident is forgiven, which means the insurance company will not increase your premium or charge a surcharge to you for that accident.
  2. Accident forgiveness allows you to manage your budget easier by knowing you will not have the surprise of an increase for 3 – 5 years because of an accident surcharge.

Accident Forgiveness Cons:

  1. The premiums are on average 40% to 50% higher than a policy offered by the same company without the accident forgiveness feature.  So yes, they will forgive your accident, but they are charging more for your premium upfront.
  2. Accident forgiveness does not remove an accident, claim or moving violation from your driving record.  Therefore you are still given points by your state and some states charge you for these points.

Accident forgiveness is not a transferable part of your insurance policy:  in other words, should you change insurance companies or move to another state, the time spent building the claims forgiveness is lost, and you have to start over with a new policy.  So all the time you spent paying the higher premium for that option on your policy is not carried over in the same way longevity would be.

What is Accident Forgiveness?

Accident forgiveness is a type of automobile insurance policy you can buy that will “forgive” your first accident and not surcharge your policy premium.   Many insurance companies are advertising this type of automobile insurance policy as a great way to not get caught in the financial pinch of having your automobile insurance premiums increase over your first accident, or your first accident in a long time. The idea is that you are not charged additional premium, or a surcharge, for the accident.  The drawback is the fact that the insurance policy cost up to 50% more than a policy without the feature known as accident forgiveness.

So do you choose to pay more now, and for the next five years?  Or do you take your chances, save money on automobile insurance premiums now and gamble to see if you have an accident?

Some of us are very safe drivers, never had an accident in all our driving years.  Maybe you would like the luxury to know if that first accident happens that you are not going to have to pay higher automobile insurance premiums for it.

Things to know about accident forgiveness:

  • This policy will not keep tickets, accidents or claims off your driving record.
  • The policy is not transferable, so if you choose to switch automobile insurance companies, you will have to start over with a new policy, and new premiums.
  • The premiums for accident forgiveness are higher than the lowest pricing tiers insurance companies offer.
  • If you often shop for your insurance, or if you have tickets and/or accidents on your driving record, this is not the best policy for you.

Keep in mind most insurance companies now surcharge you for all claims, whether they are your fault or not and whether they are non-collision claims such as vandalism and hail.  Accident forgiveness will keep your first claim off your policy, but if there is a 2nd claim or a 3rd claim, your policy will be surcharged.   And since the accident forgiveness policy cost quite a bit more than insurance policies without accident forgiveness, those surcharges will be significant.  Or the insurance company may have to take you off the accident forgiveness policy all together, and place you on another type of policy at which point the first accident is not forgiven, and now you are being charged for 2 or 3 accidents.   General, one accident surcharge is not so bad, add another and you will see a much bigger increase, make it 3 accidents, and your policy will be surcharged tremendously.

If you still have more questions, go to AgentInsure.com and search for a licensed independent agent in your area that will answer your questions.