You're pulling up to a stoplight when you hit a puddle and then a Volvo. In the split-second after you hear the metal crunch, money is likely the last thing on your mind. But in the minutes that follow, after you run through your what to do after an accident checklist, reality sets in, and you start to calculate the real costs of the accident. Unless you have car insurance with accident forgiveness, you're likely to see an increase in premiums. However, accident forgiveness can save you a bundle, so let's go over how it works, when it applies, and if it’s worth the cost.
How Accident Forgiveness Works
It's no surprise to learn how an accident affects your insurance rates. If you cause an accident, you should expect to pay more. That's because car insurance companies use your driving record to calculate your costs. However, you may even feel the no-fault accident's affect on insurance rates. Car insurance with accident forgiveness offers you a do-over. With accident forgiveness, your auto insurer agrees not to factor an accident into your insurance premium. Each insurance company defines eligibility criteria and policy specifics, but it's important to remember the accident stays on your driving record, even if it's not factored into pricing.
Types of Accident Forgiveness
Accident forgiveness policies differ from company to company, but they can be divided into three distinct types:
Built-In Accident Forgiveness: This type of accident forgiveness is a standard part of the insurance policy and does not require the feature to be added on for an additional cost. Specifics vary, but with standard accident forgiveness insurance, you're usually forgiven one accident per policy, or about three to five years.
Earned Accident Forgiveness: Earned accident forgiveness is awarded to a customer who has a clean driving record over the course of the previous policy. With this type of accident forgiveness, your auto insurer rewards you for being a safe driver by offering accident forgiveness on your policy renewal.
Purchased Accident Forgiveness: Finally, some insurance companies offer you the opportunity to purchase accident forgiveness as an addition to your preexisting policy. Specific eligibility requirements and costs are determined by each specific insurance provider.
Eligibility Requirements for Accident Forgiveness
Accident forgiveness eligibility is determined by your insurance company's own policies, but eligibility requirements fall into two separate categories: customer loyalty and safe driving. Many major insurers offer earned accident forgiveness for safe drivers who renew their policy. By "safe drivers," they usually mean those who have not caused an accident or received a moving violation over the course of the previous policy. Other companies offer accident forgiveness based on your driving record, regardless of your previous insurer.
Does Accident Forgiveness Affect Your Driving Record?
Accident forgiveness does not affect your driving record. It's critical to remember that accident forgiveness is an agreement between you and your insurer regarding pricing. It does not erase an accident from your driving record, but promises that it won't be used for a premium increase. Unfortunately, any accident you cause will still appear on your driving record, so future insurers can see it.
The Costs and Benefits of Accident Forgiveness
Depending on your situation, forgiveness may not be free. One study found that purchased accident forgiveness typically raises the insurance premium by 2-9%. The same study noted that the average price hike after an accident is 48%. Armed with these averages, you can run the numbers for your own situation to decide the best course of action for you and your family.
When Should You Consider Accident Forgiveness?
Accident forgiveness can offer benefits in plenty of situations, but the following three people might benefit the most:
People with Clean Driving Records: If you are a safe driver, you might already qualify for accident forgiveness, given your company's policies. Regardless, safe drivers see the most benefit from accident forgiveness.
People with Teen or Inexperienced Drivers: Likewise, those who have young or inexperienced drivers in their household can also see big benefits from accident forgiveness policies.
People who Stick with the Same Insurer: If you simply renew your policy every few years, you might be eligible for earned accident forgiveness according to your insurance company's terms and conditions.
Is Accident Forgiveness Worth the Extra Cost?
To determine whether or not accident forgiveness is worth the extra cost, you'll have to gather the necessary data. How much do you already pay? Is your driving record clean? How many miles do you drive a month? The answer to each of these questions will help you determine whether or not accident forgiveness is worth it for you.
Find the Best Car Insurance for Your Needs
No matter how safely you drive, you can't anticipate the unexpected. When it comes to finding the right auto insurance, accident forgiveness is a small part of a much bigger conversation. Insurers calculate your premiums based on things like your driving history, the make and model of your vehicle, and even your zip code. Driving without insurance isn't an option, so if you're ready to find the best car insurance with accident forgiveness, request a quote today.