What is Accident Forgiveness and How it Works?

Accident forgiveness is an increasingly popular optional add-on coverage for car insurance policies. But what exactly is accident forgiveness, how does it work, and is it worth paying extra for this protection? This comprehensive guide covers everything drivers need to know about accident forgiveness auto insurance.

What is Accident Forgiveness?

Accident forgiveness is a special type of car insurance coverage that prevents your insurance rates from going up after an at-fault accident. Normally, causing an accident leads to higher premiums for 3-5 years in most states. Accident forgiveness keeps just one crash from impacting your rates.

With accident forgiveness, your auto insurance company promises not to raise your rates solely due to your first at-fault accident. This protection keeps a single accident from negatively affecting your policy’s premium.

Accident forgiveness is typically only good for one accident per policy term. It also usually only applies to your first at-fault accident. Subsequent crashes would still lead to increased rates.

How Does Accident Forgiveness Work?

Accident forgiveness works by overriding the normal process of increased rates after an at-fault crash. Here’s a look at how it works:

• Accident forgiveness only applies to your first at-fault accident. Any subsequent accidents can still increase your rates.
• The accident will still appear on your CLUE auto insurance report and public driving record. It just won’t directly raise your premium.
• You’ll need to qualify for accident forgiveness, often by having 5 years clean driving history.
• Accident forgiveness typically costs extra, averaging a 2%-9% upcharge on your premium.
• It may not prevent hikes from losing other discounts after an accident.
• Accident forgiveness protects you from rate hikes for just one policy term. Your premium could still increase at renewal.
• Each insurer has its own qualifying criteria. Check to see if you’re eligible.

So in essence, accident forgiveness overrides the rate penalty for a single at-fault crash on your current policy. Just be aware it has limitations and doesn’t mean you can cause unlimited accidents without premium hikes.

Also Read: What is Comprehensive Car Insurance Coverage?

Do You Pay Extra for Accident Forgiveness?

In most cases, yes, accident forgiveness coverage costs extra. Insurance companies charge an additional monthly fee to add accident forgiveness onto your policy. Here’s what to know:

• The upcharge for accident forgiveness averages 2% to 9% nationwide across insurers.
• Some insurers provide it free to long-term customers with excellent driving records.
• California prohibits insurers from charging for accident forgiveness as an “excessive” rate.
• Compare quotes with and without accident forgiveness to see the exact cost difference.
• Over several years, the added cost could exceed the premium hike from just one future accident.

The Cost of Car Insurance for a New Driver Per Month

Always weigh the cost vs. benefit when choosing to pay extra for accident forgiveness protection on your policy. While it provides peace of mind, you may end up spending more in the long run compared to just facing increased rates if you did have a crash.

How Much Do Rates Go Up After an Accident?

To determine if accident forgiveness is worth the added premium cost, it helps to understand how much rates increase after an at-fault crash if you don’t have this protection.

• Rates typically go up about 28% to 50% or more nationwide after just one accident.
• The rate increase is greater for serious accidents with major damage and injuries. Minor fender benders may have less impact.
• Drivers under 25 see some of the largest rate hikes after accidents. Their premiums often double.
• States like California and Hawaii with “prior approval” regulations tend to have lower rate increases post-accident compared to less regulated states.
• Your insurer, location, age, type of vehicle, and other factors also affect the rate increase amount after a crash.

While unpleasant, a single minor accident is unlikely to completely bankrupt your finances through insurance hikes alone. But accident forgiveness does provide reassurance by limiting the rate impact to just your first at-fault incident.

How Long Does an Accident Affect Your Insurance Rates?

Insurance companies look back at your driving history for 3 to 5 years when calculating your auto policy premiums. Any at-fault accidents during this period lead to increased rates.

• Most states allow insurers to consider accident claims for 3 years.
• Safety-conscious states like California and Massachusetts use a 3-year lookback window.
• States without strong rate regulations may allow insurers to factor crashes into your premium for up to 5 years.
• The impact on your rates gradually decreases year-over-year as the accident moves further into your past.
• Accidents stay on your public driving record typically for 3 years after the crash date.

So expect at least 3 years of financial impact from an at-fault accident if you don’t have accident forgiveness protection on your policy. This coverage caps the effect to just the current policy term.

How Can I Get Accident Forgiveness?

The steps to getting accident forgiveness depend on your auto insurance provider. But here are some common requirements to qualify and add this coverage:

• Maintain a clean driving record for 3-5 years in a row with no accidents or tickets.
• Pass the minimum age requirement, typically 25 years old. Teen drivers usually can’t qualify.
• Purchase a policy from an insurer in your state that offers accident forgiveness. Not all do.
• Pay any added premium for optional accident forgiveness coverage.
• Carry liability coverage above your state’s legal minimum.
• Avoid filing comprehensive or collision claims apart from your one forgiven accident.
• Drive a vehicle that meets any insurer requirements for condition, safety features, and past claims.

Ultimately, check directly with your insurance company or agent to learn the qualification rules and pricing for accident forgiveness with your provider. Eligibility terms can vary.

Which Insurance Companies Offer Accident Forgiveness?

Many top national insurers now offer some form of accident forgiveness, either as a paid add-on or included free feature. Here are some to consider if you want accident forgiveness:

• Allstate – Optional endorsement available in most states.
• Erie – Forgives one accident after 5 years claim-free.
• Farmers – 3-year accident forgiveness after 20 years claim-free.
• Geico – Purchase anytime or earn after 5 years accident-free.
• Liberty Mutual – Purchase add-on coverage after 5 years claim-free.
• Nationwide – Purchase add-on coverage in select states.
• Progressive – Purchase anytime or earn after 5+ years.
• State Farm – Earn after 9 years claim-free.
• Travelers – Purchase a “Responsible Driver” policy after claim-free years.
• USAA – Earned benefit after 5 years accident-free.

Always confirm directly with an insurer if they offer accident forgiveness and what their exact qualification rules are. Eligibility terms can vary and change.

Accident Forgiveness vs. Safe Driver Discounts

Insurers reward good drivers through both accident forgiveness and safe driver discounts. But how do these rewards compare?

Accident forgiveness overlooks just one accident’s impact on your rates. Safe driver discounts provide an ongoing percentage discount so long as you remain accident-free.

Safe driver discounts offer a larger cumulative reward over time for maintaining a clean record. Accident forgiveness simply fixes your rate after a single mishap.

Drivers who qualify for both could benefit from adding accident forgiveness as an extra layer of financial protection. But safe driver discounts should be the first priority for the most savings overall.

Is Accident Forgiveness Worth It?

Whether accident forgiveness is “worth it” depends on your unique situation:

Worth it if:

• You have a safe driving history and qualify for the coverage.
• You drive a new, financed vehicle and want protection.
• You have assets to protect and want extra peace of mind.
• It’s affordable with minimal premium increase at your insurer.

May not be worth it if:

• You’re a young or new driver who likely won’t qualify.
• It adds too much cost to your policy premium.
• You have an older car and can accept higher rates if needed.
• You’d rather put the money toward higher liability coverage limits.

Take time to consider your options and do the math before paying extra for accident forgiveness protection. While it can provide rate protection after a crash, it isn’t always financially prudent or accessible for every driver.

Other Ways to Lower Car Insurance Costs

If accident forgiveness isn’t the right solution for you, here are some other ways to save on auto insurance:

• Increase deductibles – Higher deductibles lower premiums but mean more out-of-pocket costs when you file a claim.
• Limit mileage – Drive fewer annual miles to qualify for low mileage discounts from some insurers.
• Take defensive driving courses – Many insurers provide discounts for completing approved safe driving classes.

• Bundle insurance policies – You can often save by bundling your car insurance with homeowners or renters insurance from the same provider.
• Maintain good credit – Insurers frequently check credit when pricing policies. Keeping your credit score high can contribute to discounts.
• Drop unnecessary coverage – Consider dropping comprehensive and collision coverage on older cars worth less than 10 years of premiums.
• Shop around – Compare quotes every 1-2 years from various insurers to find the best rate.
• Enroll in usage-based programs – Insurers are offering more telematics and app-based programs to monitor safe driving for discounted rates.

Frequently Asked Questions

These common questions can help clarify how accident forgiveness auto insurance works:

Does accident forgiveness protect my driving record?

No, the at-fault accident will still appear on your public DMV driving record and insurance claims history. Accident forgiveness just means your insurer won’t directly raise your rates due to that one accident.

Is accident forgiveness automatic?

No, in most cases you have to take steps to actively purchase and qualify for accident forgiveness with your insurer. It’s not an automatic inclusion with standard policies.

Does accident forgiveness apply per driver or per policy?

Accident forgiveness typically only applies to the first at-fault accident per policy, not per driver. So two drivers having accidents under the same policy won’t both be forgiven.

Can I qualify for accident forgiveness as a teen?

Unfortunately, no. Nearly all insurers require a minimum of 5 years of clean driving as an adult aged 25+ to qualify for accident forgiveness. Teen drivers almost never qualify.

Will my insurance go up at renewal with accident forgiveness?

Potentially yes. Accident forgiveness mainly locks in your rate for the current 6-month or 1-year policy period. At renewal time, your rates could still increase, but not due to the one forgiven accident.

The Bottom Line on Accident Forgiveness

Accident forgiveness insurance can be a valuable add-on if you qualify and want the peace of mind. But don’t assume it will be your ticket to causing accidents without consequences. This extra coverage has limitations and may ultimately cost you more than it saves if you maintain a clean driving record.

Carefully weigh the costs against the benefits before choosing accident forgiveness. And always prioritize safe driving habits, such as staying focused and avoiding distractions at the wheel. No insurance replaces the importance of cautious driving.