What is accident forgiveness? Accidents happen. And unfortunately, if you’re at fault, accidents can be expensive for years to come. You can expect your auto insurance rates to increase at renewal time after an at-fault accident.
To help you avoid this increase, some insurers offer accident forgiveness coverage. It may seem like a no-brainer to take the chance for forgiveness, but if you’re a very good driver it may not be worth it.
What Is Accident Forgiveness?
Accident Forgiveness is an additional coverage that you may qualify for that can be added to your auto insurance policy, where your price won’t go up due to your first accident.
You may be eligible for this benefit if you have 5 years of accident-free driving. Get an even larger discount when you reach 5 years.
How Accident Forgiveness Works?
Let’s say you have a claims-free or safe driving discount that lowers your car insurance rate by 10%.
If you were to cause an accident, you would lose your discount for being a safe driver. Plus, when your policy renews, your insurance company would also likely charge you higher rates for having an accident claim on your driving record. The increase typically lasts for three to five years.
However, with accident forgiveness, your rate wouldn’t increase for causing an accident. While you may still lose the accident-free discount, your insurer would not apply an additional rate increase for the recent accident.
Accident forgiveness conditions:
- Even if you have accident forgiveness, any accidents you cause will still show up on your driving record. If you switch to a different car insurance company within a few years of the collision, that accident may negatively affect your rates.
- Accident forgiveness benefits usually only apply to one at-fault accident. After your accident forgiveness has been used, a second accident could increase your premiums.
- After the accident, you may become eligible for accident forgiveness again after a few years of accident-free driving, but some companies only let you use accident forgiveness once per policy.
- Accident forgiveness is not offered by every insurance company and might not be available in every state.
Accident Forgiveness Insurance Rules
Even if your car insurance company offers accident forgiveness coverage, not everyone qualifies and some accidents won’t be eligible for forgiveness. Here are a few examples of common requirements and exclusions you should be aware of:
- Clean driving record. Typically, insurers require you to have a clean driving record to qualify for accident forgiveness. For example, to qualify for the Farmers Flex from Farmers Insurance, all drivers on the policy over age 25 must have no chargeable at-fault accidents, no more than one minor or speeding citation and no DUIs. Drivers under age 25 must have no traffic violations or citations of any kind.
- One accident per policy. Accident forgiveness is not an unlimited pass. Usually it allows forgiveness for only one at-fault accident per policy, even if you have multiple drivers on the policy.
Is Accident Forgiveness Insurance Worth it?
Accident forgiveness may be worth it, especially if you have high-risk drivers in your household.
Our analysis of the national average annual cost of accident forgiveness from some large companies finds it’s usually pretty affordable. The yearly cost varies from $15 to $60, a spread of $45.
We compared the annual cost of accident forgiveness to the price of coverage without it and how much more you’d pay with an accident on your record. After crunching the numbers, we found accident forgiveness is worth the extra cost.
- You’d pay an amount equal to eight years of accident forgiveness with USAA car insurance to equal the $472 USAA rate hike from an accident. And remember that increase would continue for three to five years normally, so paying $60 a year to combat a hike is worth it.
- You’d pay what is equal to 63 years of accident forgiveness costs with Nationwide car insurance to equal the over $900 rate increase for one at-fault accident with injury. Thus, accident forgiveness with Nationwide is quite the bargain.
The Benefits of Accident Forgiveness
You’re a safe driver, right? So shouldn’t you just take your chances rather than pay extra for at-fault accident forgiveness? Maybe, but first review your insurance company’s at-fault accident rate hike numbers and compare costs between those and what you would pay to add accident forgiveness to your policy.
According to Condor, your rates could go up by as much as 50% after an at-fault accident. Plus, even if you’re typically a safe driver, it only takes one mistake to be at fault in an accident. “You can usually add accident forgiveness to your policy for less than $30 a month,” she says. So, the feature can save the average person from a few hundred to several thousand dollars.
The Drawbacks of Accident Forgiveness
Not all accidents automatically raise your insurance rates. The severity and cost of the claim, your driving record, and whether you have other violations all help determine if and how much your rate will increase.
In states with no-fault insurance, in which coverage helps pay for all medical bills, your insurance may consider the amount they pay toward expenses when deciding if your rate will change after you file a claim for forgiveness following an injury-related accident.
Insurance Information Institute. “Background On: No-Fault Auto Insurance.”
Accident forgiveness isn’t available in every state, nor is it offered by every insurance company. Plus, some people won’t qualify for it (namely, those who have had one or more at-fault accidents or moving violations on their record in the past three years), notes Earl Jones, an insurance agency owner in Sunnyvale, California.
You can only use it once in a three- to five-year period, so if you use it, you’ll need to wait for your policy to reset to be eligible for forgiveness again.
How Much Can It Save the Average Person?
Though most at-fault accidents raise your premiums, the amount is determined by each carrier. To add accident forgiveness coverage will likely increase your premium from 2% to 9%, depending on the carrier.
How much it saves you overall depends entirely on the accident, your driving record, the severity of the claim, and the carrier’s particulars—mostly things you likely cannot weigh beforehand or know in advance.
What Do the Experts Say?
If you’re still on the fence about getting this feature, weigh 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 must pay for it, and perhaps whether you have a clean driving record, and ask your agent if you can get it as a loyalty courtesy.
If you’re shopping for a new policy and this feature is appealing, get a few different quotes to see how it works at various insurers and what it costs at each. If it’s affordable and you think it’s right for you, go ahead and sign up.
However, “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 site.
But if you do sign up, read the contract language carefully because some accident forgiveness policies may not apply to every driver on the policy, or only apply to accidents that don’t exceed a certain claim value. Make sure you know what you’re signing up for when it comes to forgiveness.
Alternatives to Accident Forgiveness for Good Drivers
For some, accident forgiveness coverage may not be an option. For example, we analyzed a Farmers policy that says you can’t qualify if there are any drivers in the household under age 21 with less than three years of driving experience.
Good driver discounts
If you don’t qualify for accident forgiveness, you may be able to find other car insurance discounts for safe drivers. For example, with Geico’s Five-Year Accident-Free Good Driver discount, drivers with a clean five-year driving record are eligible for up to 22% off on most coverage types.
Another potential savings is a “vanishing deductible.” This is usually an optional feature that rewards safe drivers by reducing their deductible amount for claims as long they have continuous safe driving.
For example, drivers who purchase a Premier Responsible Driver Plan from Travelers insurance receive a Decreasing Deductible which gives them a $50 credit toward their deductibles for every six months they are accident-free (up to $500).
Do you pay extra for accident forgiveness?
You’ll typically have to pay extra for accident forgiveness. Some insurance companies offer accident forgiveness as a free perk to qualified drivers with good records. For example, Geico offers free accident forgiveness to drivers who have been accident-free for five years.
Can I buy accident forgiveness after an accident?
You can’t buy forgiveness for an accident that has already happened. And if you recently caused an accident, you won’t be eligible to buy forgiveness.
How long does an accident stay on your record?
The length of time an accident stays on your driving record depends on your state, but a surcharge typically affects your car insurance rates for three to five years.
For example, states like New Jersey, New York and Texas allow insurance companies to surcharge only for accidents in the previous three years. Other states, like Massachusetts, allow insurance companies to surcharge for accidents in the previous five years.
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