Accident Forgiveness is a program offered by insurance companies that ensures rates will not increase after your first at-fault car accident. To determine if you need or want accident forgiveness coverage, you should know what it is, if there is a cost benefit, and whether you are eligible for the program.
Though accident forgiveness is a program that will promise not to increase your premiums after your 1st accident, it is important to understand that it will not erase your driving record. So, if you switch insurance companies or if your insurance company chooses to drop you, other insurers will be able to see past – forgiven – accidents which will likely play into how much insurance will cost in the future.
Most insurance companies differ on their eligibility standards. The majority require a driver to be accident free for 3 to 5 years. Some companies allow you to purchase or earn it with an accident free driving record. Others, like Progressive, use a loyalty program. Progressive requires their drivers to carry a Progressive insurance policy for a certain amount of years and be accident free before you will quality. Most insurance companies will only forgive one accident per household, not per driver.
It is important to determine whether the cost of accident forgiveness will outweigh the benefits. As mentioned above, usually a clean driving record is needed to qualify for the program. So it may seem that you are paying for an accident you may never cause, though accidents are unexpected and a NerdWallet report showed that insurance premiums increased an average of $566 per year or 44% after one at-fault accident on their record. The length of time an accident stays on your record will depend on the company, but ranges from 3-5 years.
The cost of accident forgiveness varies depending on the state on the amount of coverage. Some insurance companies charge their drivers a flat flee while other charge a percentage of the premium. Depending on the state and insurance company, NerdWallet has found that Nationwide charged $35 – $117 per year in Illinois and $40 – $70 per year in Ohio. While Geico charged 5% in Illinois, Ohio, and Oregon, and 7% in Pennsylvania.
The additional charges can add up if you continue to pay for accident forgiveness without getting into an accident, but if you believe you are at an increased risk or maybe have teenage drivers, then the cost may be worth it. To further determine if Accident Forgiveness is for you, research into your state and insurance company would be worth your time.