Keeping a clean driving record is something to pride yourself on. Not only are you keeping yourself and other drivers safe, you’re saving yourself a lot of money in deductibles and premium rates. But what happens if the time comes that you cause your first accident? You don’t want to watch your premiums go up over one small mistake after years of having a perfect record. That’s why a lot of auto insurance customers seek out accident forgiveness.
If you aren’t familiar with accident forgiveness, you can check out a past blog, in which we break down the basics of it. In short, accident forgiveness is a perk that allows customers to not pay extra rates following their first at-fault accident. After someone files a car insurance claim for an accident he or she caused, their insurance company usually increases their rates significantly come renewal time; accident forgiveness serves as a get-out-of-jail-free card for safe drivers, keeping their rates with their insurance company manageable.
Normally, your rates would skyrocket following an at-fault accident, costing you thousands. In that sense, accident forgiveness looks like a great deal. However, don’t be too quick to buy into this addition; there’s a catch, which could make you lose money down the line.
How to Qualify for Accident Forgiveness
Generally, most companies require their customers to have 3 to 5 years of safe driving history before they can qualify for accident forgiveness. That means no accidents and no major traffic violations over the course of that time.
Not Totally Forgiven
If you purchase accident forgiveness, this doesn’t keep it from appearing on your driving record. In other words, if you want to switch insurance companies within a few years after your accident, you might receive high quotes, as your status as a safe driver may still be revoked.
Accident Insurance as a Benefit
While most companies offer accident forgiveness as an add-on, some insurers include it in their policies. Primarily, the purpose of this is to attract new customers and reward loyal ones.
Every Insurance Provider Does It Differently
Let’s look at some examples of accident forgiveness policies by some of the biggest insurers. Erie Insurance rewards their loyal customers by offering no additional premiums or surcharges with an accident forgiveness policy; customers simply have to be an accident-free customer for 3 years to be qualified for this perk. Travelers has a “Responsible Driver Plan,” in which customers get accident forgiveness for one accident and one minor traffic violation every 3 years. Nationwide provides forgiveness to multiple drivers on the policy, but it’s only valid for one forgiven accident per policy.
What’s the Catch?
More times than not, this forgiveness comes with a catch. Oftentimes, you’ll get higher insurance quotes with policies that include accident forgiveness. These higher quotes vary by company, but in general, the prices are less than the rate increase you might experience following an at-fault accident. There’s a chance you could lose money in the long run if you purchase accident forgiveness. If you buy it for multiple years and never get into an accident, the insurance company will make out better than you will. The bottom line: with accident forgiveness, there’s a chance you could lose money.
So, Should You Buy It?
Make sure you weigh out the options before opting into a company’s accident forgiveness policy. To decide if accident forgiveness with an added cost is a good deal for you, compare the extra cost of the program with the insurance provider’s surcharge for one accident. You can ask an agent to explain how much these rates would increase, as providers usually don’t advertise these surcharge rates. Figure out how long you would pay for accident forgiveness before the higher premiums are more expensive than the surcharge you’d experience after an accident. In addition, don’t join an auto insurance company simply for the perk of accident forgiveness; while this perk is an added bonus, the company’s reliability and rates should be your determining factors.