Two People on Phones After Car AccidentWhat is Accident Forgiveness Auto Insurance?

Allstate first pioneered “accident forgiveness” as a way to lure in more potential customers, and multiple other companies have since followed suit. If you’re shopping for car insurance, you may run across accident forgiveness as an option from your provider. Whether it’s worth getting will depend on the cost of the policy and your own driving habits. By understanding how it works, however, you can make an informed decision about your insurance.How Accident Forgiveness Works

Auto insurance premiums are calculated based on a driver’s risk. People who are at a high risk of getting into an accident will pay more for insurance. Along these same lines, people who get into auto accidents will usually experience an increase in premiums. This happens for two primary reasons. First, the insurance company must recover the cost of the claim. Second, the driver may be viewed as being more likely to get into additional accidents in the future.

Your insurance premiums will not go up immediately. Instead, the premiums will change whenever the policy renews. This means that you may not see the increase on your bill for several months. In some cases, an insurance company may opt to drop an insured or refuse to renew the policy rather than raise the premiums. This usually won’t happen after just one accident, but it can occur if you are deemed too high of a risk to be insurable.

Accident forgiveness acts as a way to keep your premiums from increasing after an accident. Different insurance companies will handle this in different ways. For example, most insurers provide forgiveness only for the first accident that occurs after the policy is purchased. Others provide forgiveness for the duration of the policy regardless of how many accidents occur. It’s important to understand which type you’re getting before agreeing to any policy.

The accident forgiveness on your insurance policy only protects you from having your rates increase as a result of that accident. It does not prevent that accident from being listed on your driving record, and it will not prevent your rates from increasing due to other risk factors like speeding tickets.

Some accident forgiveness programs come bundled with other features. For example, your deductible may drop each year that you go without a claim, or you may receive a cash rebate each accident-free year. These may or may not come independently from accident forgiveness; as always, it’s necessary to review the policy details to confirm what you’re buying.

What Insurance Companies Offer Accident Forgiveness?

Many insurance companies are beginning to offer accident forgiveness. Here are some of the best-known insurers offering this product; other small insurers may offer it as well in order to stay competitive with the big-name insurers.

— Allstate has a “Gold” and “Platinum” package under their Your Choice Auto policy. The “Gold” option protects the driver against the first accident. The “Platinum” protection extends to all accidents that occur while the driver carries that coverage. A “Platinum” policy can be downgraded at the insurance company’s discretion. In addition to the accident forgiveness, Your Choice Auto policies come with a deductible reduction program that reduces the driver’s deductible by $100 for each claim-free year.

— Nationwide offers both a vanishing deductible and accident forgiveness. This can be used only once per policy. The vanishing deductible works in much the same way as Allstate’s deductible reduction program.

— Liberty Mutual allows drivers to receive accident forgiveness for their first accident as long as they have previously gone for five years without an accident and three years with no traffic citations. Unlike many other insurers, Liberty Mutual offers this option for free.

— Geico and Progressive both offer the potential for accident forgiveness toward customers who have held policies for a long time and have a safe driving record. These are not formal offerings, and accident forgiveness is not guaranteed.

Is Accident Forgiveness Worth Getting?

In exchange for the benefits of accident forgiveness, most insurance companies with this option charge a higher premium. Allstate, for example, will charge as much as 15 percent for the benefit of its Platinum protection. This may not be something that they advertise widely, so the only way you’ll know is if you research the policy carefully. Although most advertising campaigns make accident forgiveness seem like a standard policy feature, the truth is that many insurers offer it as a paid add-on to a regular insurance policy.

Of course, many people find that accident forgiveness is well worth its price tag. Knowing that your premiums will not be adversely affected by an accident can provide valuable peace-of-mind to drivers, and the extra perks associated with accident forgiveness may be quite valuable to the consumer. All the same, it’s a good idea to determine how much more the accident forgiveness option costs before opting for this type of policy. If you’re a good driver, you may actually lose money over time by choosing to opt into accident forgiveness.