When you buy auto insurance, you hope that you won’t ever have to use it. But accidents happen. And you might have to file a claim, which will cause your premiums to rise.
You might’ve come across accident forgiveness while you were shopping around for car insurance. The term “accident forgiveness” might have instant appeal, but what is it exactly? And is it right for you?
We’ll delve into the specifics of accident forgiveness, its pros and cons, and how to decide whether it’s worth the extra cost.
What is accident forgiveness?
Accident forgiveness is an add-on option for your auto insurance policy. In the case of an at-fault accident, which means you were the one that caused the accident, your insurer won’t raise your premium.
There are two ways you can tack on accident forgiveness to your insurance policy: The first is as a no-extra-charge, “dangling carrot” type perk to reward longtime policyholders and keep them loyal. The second way is as an add-on that can be purchased.
It sounds pretty sweet, but there is one main caveat. Namely, it’s not available to just anyone. Accident forgiveness is typically available to drivers who have had a clean driving record for 3-5 years. Also, if you have multiple drivers on the same policy, everyone must have a clean driving record to be eligible.
So if you’ve had your fair share of violations, accidents that caused damage and injuries, and mishaps, you might not even be eligible for the add-on feature.
Do all insurers offer accident forgiveness?
Many of the large, major insurance companies offer accident forgiveness. However, it’s not available in all states.
If you’re interested in adding accident forgiveness to your policy, reach out to your insurance company to see if they offer it.
Why doesn’t California offer it?
The prop requires insurance companies to justify their rates. Plus, it also banned insurers from charging over-the-top rates and using rating factors like credit score, zip code, and race.
Accident forgiveness falls under those parameters. Essentially, insurance companies bump up your premium up front, to offset the cost of not increasing your premium further down the line if you are involved in an accident. For this reason, accident forgiveness is a feature that doesn’t get the green light.
Advantages of accident forgiveness
The obvious pro of accident forgiveness is that it could prevent your premium from spiking should you be involved in a car accident where you’re at fault.
Being at-fault for an accident can lead to higher premiums. In fact, a single claim of $2,000 or more where you’re the liable party could mean an increase of 44.1 percent, or an average of $371 to your auto insurance premium.
Adding it to your policy can also come in handy if you have teen drivers in your household — or drivers who are under 25. That’s because younger drivers tend to be seen as more at-risk and have some of the highest rates of insurance.
Downsides of accident forgiveness
Even if accident forgiveness comes with your standard auto insurance policy, it will cost a little more. Analysis by NerdWallet found that policies cost anywhere from 2 percent to 9 percent more with accident forgiveness included.
There are also limitations that come with accident forgiveness in your policy. Insurers might have different sets of rules and policy conditions.
Some insurers require you to have a three-year track record of safe driving before becoming eligible, others require five years. For some insurance companies, accident forgiveness kicks in right away.
Some insurance companies only allow accident forgiveness to apply for the first accident within a designated time frame, while others allow you to apply accident forgiveness to multiple accidents.
In some cases, it only applies for one accident per policy, not per driver. That means if you have multiple drivers on a policy and one driver uses it after an at-fault accident, it’s no longer valid for use by the other drivers.
And while your premiums might be protected from an immediate spike, accident forgiveness doesn’t erase the at-fault accident. It will still show up on your driving record.
If you’re shopping around for insurance, other insurers will be able to see the accident and can factor it in while giving you a quote.
Is accident forgiveness worth it?
There’s no one-size-fits-all approach. First, you’ll need to qualify, and have a clean record for the past three to five years. In some ways it’s a strange feature, because if you need to be a safe driver to qualify, chances are you might not need it.
Keep in mind that claims will cost you. And you could see a huge spike in your premiums. For a $2,000 claim, you could see a 44 percent increase.
If you have a history of accidents, violations, and subsequently a poor driving record, it could be beneficial for you to purchase it as an add-on to your policy.
To gauge whether it’s worth it, you’ll want to get quotes to see how much more it will cost to include it in your policy. When asking for quotes from different insurers, compare your premium with accident forgiveness, and without it.
Remember: even if the feature is folded into your standard policy, your premium will go up a bit. So it’s worth it to shop around.
Auto insurance premiums tend to go up even if you don’t tarnish your spotless driving record. So you might want to shop around every year or two to try to get the best policy regardless.
While it sounds appealing at first, you shouldn’t rely on accident forgiveness too heavily. You should focus on maintaining a clean driving record. That will benefit you more in the long run. You will be up for more discounts, such as the good driver discount. And being accident-free will help get you better rates.
You can always reach out to insurers to see what other kinds of discounts you’re eligible for.
You might be eligible for being a good student, or for paying every six months instead of monthly, or a discount to opt in to autopay.
Once you see how your discounts stack up against accident forgiveness, you’ll be able to gauge whether the add-on feature is worth it.
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