What Is Accident Forgiveness?
Oh, no! You recently had a fender bender and are wondering if the accident forgiveness provision you added to your auto insurance policy would pay off. Accident forgiveness is a feature available from some insurers that "forgives" the driver if the accident is determined to be your fault. This means that an accident in which you are at blame will have no negative consequences for you, such as a rate increase.
"Besides an accident counting as an infraction, most policies also include some forms of forgiveness for tickets, particularly speeding tickets," explains Karen Condor, an insurance expert at 4AutoInsuranceQuote.com, an insurance comparison site.
You can usually obtain accident forgiveness one of three ways:
- Adding it to your coverage and paying more for it.
- Having it offered as a safe driver and loyal customer
- Some hybrid of the two—as a benefit for loyal clients and a paid option for others who are interested.
The Benefits of Accident Forgiveness
You are a safe driver, correct? Shouldn't you just take your risks rather than paying more for at-fault accident forgiveness? Maybe, but first study your insurance company's at-fault accident rate hike numbers and compare them to the cost of adding accident forgiveness to your coverage.
According to Condor, your rates could rise by much to 50% following an at-fault accident. Furthermore, even if you're a generally cautious driver, it only takes one error to be at fault in an accident. "You can usually add accident forgiveness to your policy for less than $30 a month," she goes on to suggest. So, the function can save the average person between a few hundred and several thousand dollars.
The Drawbacks of Accident Forgiveness
Not all accidents result in higher insurance costs. The severity and cost of the claim, your driving record, and if you have other infractions all influence whether and how much your rate will rise.
In states with no-fault insurance, which pays for all medical bills, your insurance company may consider the amount they pay toward expenditures when determining whether your rate will change if you make a claim for forgiveness following an injury-related accident.
Accident forgiveness is not accessible in every state, nor is it provided by all insurance companies. Furthermore, Earl Jones, an insurance business owner in Sunnyvale, California, points out that some people will be ineligible (namely, those who have had one or more at-fault accidents or moving offenses in the previous three years).
You can only use it once every three to five years, so if you do, you will have to wait for your policy to reset before being eligible for forgiveness again.
How Much Can It Save the Average Person?
Though most at-fault accidents raise your premiums, the exact amount varies by company. Adding accident forgiveness policy will generally boost your rate by 2% to 9%, depending on the company. The amount you save overall is totally dependent on the accident, your driving record, the severity of the claim, and the carrier's particulars—most of which you are unlikely to weigh or know ahead of time.
What Do the Experts Say?
If you're still undecided about getting this feature, consider whether you might need it (for example, if you have a risky driver on your policy), whether it's free with your carrier or you have to pay for it, and whether you have a clean driving record. Then, ask your agent if you can get it as a loyalty courtesy.
If you're searching for a new insurance and this feature appeals to you, acquire a few quotations from different insurers to understand how it works and how much it costs. If it's affordable and you believe it's suitable for you, join up.
"It's generally not worth the additional cost if all drivers have good experience and clean driving records," says Scott Nelson, CEO of MoneyNerd, a personal finance website.
However, if you decide to sign up, carefully read the contract language because certain accident forgiveness programs may not apply to all drivers on the policy or may only apply to incidents that do not surpass a specific claim value. Make sure you understand what you're signing up for when it comes to forgiveness.