For most drivers on the road today, auto insurance is absolutely necessary - as is the premium price. While most people don't enjoy having to pay the regular premium expense for this coverage, without car insurance, a driver could be out a great deal of money - and then some - if they are involved in an accident.

Typically, if an accident occurs, there are a myriad of costs that tend to pile up. First, if you are the driver who is at-fault, you will be given a traffic citation. In addition, it usually goes without saying that there will also be vehicle repairs involved.

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Should the repairs be extensive enough, you may need to file an insurance claim. If so, and if the damage is covered, you are likely to still have to pay your policy's deductible as well. However, by receiving the traffic citation, it is also probable that you will receive points on your driving record - and when that happens, it is likely to lead to an increase in your auto insurance rates.

Even without the citation, though, if you file an auto insurance claim - which leads to your insurer having to pay out a sum of money for your repairs - you could also see your premium rates increase. It is here that you may wish that you had accident forgiveness.

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What Exactly Is Accident Forgiveness?

Today, there are several auto insurers that are offering a benefit to their policyholders called accident forgiveness. While there is no set definition of what this benefit is, the basic premise of accident forgiveness is that the insurance company will essentially "forgive" your accident by not increasing your auto insurance premium rates.

Because accident forgiveness is specific only to the insurer that offers it, there is the possibility that if you move your coverage to another auto insurer, the new insurance company may factor the accident into your premium quote. With that in mind, accident forgiveness is a way for the insurers that offer it to keep their policyholders loyal to them.

How Does Accident Forgiveness Work?

Although all auto insurance companies that offer accident forgiveness work somewhat differently, there are essentially three ways in which most of these insurers offer this particular benefit. These include the following:

  • For being a loyal customer. Some auto insurance companies will offer accident forgiveness to their policyholders who have been insured with the company for a certain period of time. This can tend to keep these individuals insured with the company longer and less likely to move their coverage elsewhere.
  • Based on driving history. Many insurers that offer accident forgiveness will require that a customer has a clean driving record for a certain length of time before he or she is offered this particular benefit. In some cases, the individual's driving record must be clean for up to five years.
  • As a new customer. In some cases, an insurer will offer accident forgiveness in order to entice new customers over to their company. Doing so may even "forgive" certain customers for previous blemishes on their driving records.

car wreck, driver reaction drawing

How Can Accident Forgiveness Affect Your Auto Insurance Premium?

In some cases, accident forgiveness may be included in the standard section of a person's auto insurance premium. In this case, this particular benefit will not cost the insured any additional amount of premium.

However, in other instances, an insured may be required to pay more for this feature. For example, accident forgiveness could be offered as an additional coverage option or endorsement on the insurance policy.

With that in mind, it is important to inquire with the insurance company as to how accident forgiveness will be included if it is offered to you, and whether or not it will be included at no additional premium charge. There are certain cases where having an accident on an insured's record may still be cheaper to insure than having a policy with the additional premium charge for accident forgiveness. All situations are different.

Other Considerations Regarding Accident Forgiveness

While accident forgiveness can be a great feature for keeping your auto insurance premiums down if you are involved in an accident, it is crucial to know that this feature does not keep the points off of your driving record.

Accident forgiveness is associated only with your insurance policy, and not with the Department of Motor Vehicles or the government. Therefore, by having the insurance company "forgive" your accident, any points that you accumulate on your driving record will still remain.

The accident forgiveness feature can be a great way, however, to keep your auto insurance costs down when it would otherwise rise - sometimes substantially - following an auto accident. This can be especially beneficial if you are required to pay an insurance deductible and any other accident-related costs that have you already over your budget.

Photo credits (top image): Graham, Ray Dumas, Luke Jones, orangesky3