What Is Accident Forgiveness?
Accident forgiveness is a car insurance feature that prevents the policyholder’s premium from going up after their first car accident within a certain period of time. Some car insurance companies offer accident forgiveness as a free benefit to loyal customers, while other insurers charge for accident forgiveness. Each insurer with accident forgiveness has its own eligibility requirements.
How Does Accident Forgiveness Work?
Accident forgiveness works by allowing the policyholder to have one at-fault accident forgiven within a certain timeframe. Without accident forgiveness, one at-fault accident raises rates by an average of 48%. Depending on the company, accident forgiveness can usually only be used once every 3-5 years.
Accident forgiveness is often free for policyholders who earn it as a reward for years of safe driving and/or customer loyalty. For drivers who choose to purchase accident forgiveness as an optional policy add-on, it usually increases premiums by up to 10%, depending on the insurance company.
Is Accident Forgiveness Worth It?
Accident forgiveness is worth it if you frequently get into accidents or if your insurance company offers it for free as a loyalty perk. Similarly, if you drive more miles than the average driver or live in an area that has a lot of traffic and accidents, the cost of accident forgiveness may be worth it.
Learn more about when accident forgiveness is worth it.
Types of Accident Forgiveness
Insurance companies generally offer accident forgiveness as a paid program, a reward for loyalty, or as a combination of those.
Paid Insurance Product – Some companies, such as Nationwide, offer accident forgiveness as an add-on option. Others incorporate the feature into a larger package, such as Allstate’s “Your Choice Auto” Gold and Platinum packages.
Customer Loyalty Service – If you are a long-term safe driver, your insurance company may recognize your loyalty and driving history with no-cost accident forgiveness.
Hybrid Product and Service – Some companies offer a paid accident forgiveness product to new and less safe customers and give free accident forgiveness to long-term customers with a record of safe driving.
Alternatives to Accident Forgiveness
If you don’t qualify for your insurance company’s accident forgiveness program or don’t want to pay extra for it, there are other options that can help you save money long-term.
Accident Forgiveness Alternatives
|Keep your rates low even after an accident|
|Lowers your deductible each year you go without having an accident|
|Raising your deductible can lower your premiums|
Best Accident Forgiveness Insurance Companies
The best accident forgiveness companies are Allstate and Geico because they offer excellent accident forgiveness programs at affordable prices and receive great customer service reviews.
Learn more about the best accident forgiveness companies.
How Accidents and Accident Forgiveness Affect Car Insurance Rates
Depending on your insurance company and policy, accident forgiveness can help you avoid many of the negative aspects of having an accident on your record. However, with many accident forgiveness programs, even though you won’t see an increase to your premiums, you may still see some changes to your insurance because of the accident.
- Accident Reporting: Insurance companies always report accidents and claims to reporting companies like LexisNexis. So, whether or not the accident affects your rates, it will still show up on your CLUE report. If you have had an accident forgiven in the past and are planning to shop for new insurance, be aware that you could see higher rates from other insurers even if your current company forgave the accident.
- Discounts: If you had a great driving record before the accident, you likely have safe driving discounts applied to your account. Even with accident forgiveness, you could lose those discounts, causing a bit of an increase in your premiums.
- Renewal: When it comes time to renew your policy, an insurance company may recalculate your rates based on the past term. While it is uncommon, your insurance company could choose to not renew your policy after very serious accidents, even with accident forgiveness.
Accident Forgiveness Tips
Depending on your company, policy and state, there are still some twists and turns to navigate when it comes to accident forgiveness. Here are some things you can do to make the process easier.
1. Switch Insurers
In general, accident forgiveness by itself isn’t a good reason to switch companies. The one exception is if you’ve recently had an accident. If you don’t already have accident forgiveness, your current company is likely to increase your rate. However, to win your business, another insurer may be willing to forgive your most recent accident.
If you can’t find a company that will forgive the accident for free, you might be able to find one that will accept you into an inexpensive accident forgiveness program.
2. Look for affordable options
Look for policies that reward safe driving with accident forgiveness as a loyalty service or offer the product as an inexpensive add on.
3. Consider the pros and the cons
While accident forgiveness is a nice perk, it is not always wise to pay extra for it. In most cases, if you are a safe driver who rarely files claims, you will rarely recoup the extra cost you pay for accident forgiveness.
4. Ask the right questions
Before paying extra for accident forgiveness, ask your insurance company about how a claim would affect your rates without it, including what discounts would be lost and how much the accident surcharge is.