Accident Forgiveness and Car Insurance Rates

You may have heard the car insurance commercials touting accident forgiveness. This sounds great but what exactly does it mean? It basically suggests that when you cause an accident, your insurance company will not increase your rates. Rather than penalize you, it forgives you. Forgiveness can take several forms.

Partial Forgiveness

When you are partially forgiven, your premiums will be increased but not as high as they would without the forgiveness. If your premiums increase by $100 per year without forgiveness, a partial forgiveness may result in a $50 per year addition to your premium costs.

Total Forgiveness

This type of forgiveness is even better because you will see absolutely no rate increase after causing an accident. Forgiveness is intended for certain accidents that result in minor damage to vehicles and usually no injuries such as with a minor fender-bender. Major accidents that result in people being transported to area hospitals may not be eligible for accident forgiveness.

First Accident Forgiveness

Long-term customers who have spotless driving records are most likely to be offered this type of forgiveness. Similar to the other forms of forgiveness, this will depend upon several factors such as the type of accident and behavior that may have contributed to the accident. For example, if you were legally drunk at the time of the accident, do not expect to be forgiven.

Forgiveness Criteria

Accident forgiveness is not available with every insurance company. For those that do offer it, the specific form it takes is entirely at the discretion of the insurance company. Each will have specific conditions that must be met before forgiveness kicks in. You may have to be a customer with them for a specific number of years and have had no accidents during that time. Policies that include teen drivers are typically not eligible for accident forgiveness.

Other Considerations

Car insurance companies that offer forgiveness build it into their rate structure – it is not exactly a freebie. You just may not be aware of it as part of your coverage. Keep in mind that just because your insurance company forgives your accident does not mean it is wiped clean from your record. It can still affect future insurance policies and rates. And some companies will give you accident forgiveness while dropping your safe driving discount so you can still see an increase in premiums.

Whether or not you can get accident forgiveness is determined by your state's insurance laws. Policies that include accident forgiveness have higher premiums. Those that allow multiple accidents to be forgiven can be very expensive.