How Accident Forgiveness Works?


At some point in our lives, each of us will need to be forgiven for something. Accidents happen and, while it’s always more prudent to be careful than to be sorry, things do sometimes spiral out of our control. This is typically the case when a series of mistakes cascade into an auto accident. The good news is many insurance companies have a mechanism in place to stave off a potential rate increase.

Let’s take a look at how accident forgiveness works.

What Is Accident Forgiveness?

Typically reserved for their best customers, auto insurers will often waive rate increases for the first accident in which they are found to be at fault. This is important because there are instances in which an accident can trigger a significant jump in the price of your coverage come renewal time.

Generally speaking, you’ll need a clean driving record to qualify — that is one free of traffic citations as well as previous accidents. Some companies offer it at no additional charge as a value-added feature to differentiate themselves from their competitors. Others offer it as an optional add-on for which you’ll pay an additional premium.

How Accident Forgiveness Works

The exact parameters vary from company to company. Some offer it right away, while others require you to have a three- to five-year history with the carrier before you’re eligible for the coverage. Still others will offer it to you as a new customer, as long as your driving record has been clean for five years before they begin covering you.

Generally speaking, only one claim per policy will be forgiven. After that, the gloves come off and your wallet is fair game. OK, so it’s not quite that mercenary per se. However, once the initial accident is forgiven, rate increases are a definite possibility should there be subsequent incidents.

Reading between the lines, you may have surmised the forgiveness protection can be extended to every driver listed on the policy. This can be of particular benefit if you have a teen driver in the household who has yet to have their first crash. In some cases, insurers will forgive an additional accident if three or more years elapse between the two.

Is It Worthwhile?

The value of this coverage is a topic of debate among financial experts. Some say it isn’t worth buying because it only protects you in the event of an accident in which you’re found to be at fault, so a really good driver might never need it. Moreover, good drivers also enjoy better rates regardless of whether they lease or buy a car courtesy of the discounts for which they’ll be eligible.

The thought is those discounts could serve to offset the cost of any rate increase over the long run. Thus, buying additional insurance is considered to be wasteful for such drivers. On the other hand, as we mentioned above, the coverage could be a godsend if you have an inexperienced driver in your household.

Bottom line, though, even if it’s touted as being free, you’re still paying for it because the potential risk has been factored into your rate just the same.

Understanding how accident forgiveness works, the best play is to ask your agent how that first at-fault crash would impact your rates. Such charges are typically predetermined, so that information can be readily provided. You might be better off looking for other ways to lower your rates instead. You can also ask for quotes with forgiveness coverage — and without it — if your insurer presents it on an à la carte basis.


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