A single at-fault accident can have a devastating effect on your car insurance rates. In some cases, your annual premiums may increase by over 100 percent. If your driving record contains past at-fault collisions, your rates may climb even higher as you’re placed into a high-risk category of drivers.
But what if your first accident could be forgiven? What if, after reporting the incident to your insurance company, they agreed to keep your rates at the same level, or only raise them slightly? A lot of consumers are unaware that many auto insurers will do exactly that. It’s a feature called “accident forgiveness.” Below, we’ll explain how it works, and the different ways it is offered to policyholders. You’ll also learn what to expect if you somehow cause a second collision.
How “Forgiveness” Is Granted Following An Accident
Auto insurers use a star rating system to determine the risk of extending coverage to any given driver. Someone with six stars (the maximum number) is deemed to be safe. Someone with a three-star rating is considered to be less so. The worse your driving record, the lower your rating.
Without the benefit of accident forgiveness, a single at-fault collision may cause your star rating to plummet. For example, if you once enjoyed a perfect six-star rating, and cause a major accident, your rating may decline to two or three stars. Because many insurers base part of their rate calculation on this number, you can expect your premiums to rise dramatically.
If your car insurance policy includes accident forgiveness, an at-fault collision won’t have nearly the same effect on your star rating or premiums. Returning to the above example, your insurer might lower your rating to five or four stars. As a result, any rate increase will be much smaller.
It’s worth mentioning that insurance companies are unlikely to extend this feature to any but the safest drivers. If you already have an at-fault collision on your driving record, your insurer is unlikely to “forgive” another.
“Free” Feature Versus A For-Fee Endorsement
Each insurance company handles accident forgiveness differently. Some will automatically add the feature to your policy (assuming your driving record is clean); others will allow you to purchase the feature as an optional rider, or endorsement; and still others will refrain from offering the provision, even if your driving record is flawless.
When this feature is added to your policy automatically, it is usually extended in one of two ways. Your insurer will either forgive an accident entirely or partly. In the former case, your star rating will remain the same, and your premiums will not increase. With the latter, your rating may decline by one or two stars, which will result in a rate increase. However, any rise will be far less than would be the case without this endorsement. In both cases, you may lose your “good driver” discount.
When accident forgiveness is purchased as an optional provision, your insurer will forgive an at-fault collision entirely. Moreover, you can pay extra in order to preserve your good driver discount, or any discount that might otherwise be in jeopardy.
What To Expect Following A Second (Or Third!) Accident
Once your insurance company forgives one at-fault collision, it’s tempting to think they will forgive a second one. But your insurer is likely to treat a second accident as they would a first-time event without the benefit of accident forgiveness. That is, your star rating will probably plummet, and your rates will likely increase substantially.
The reason is because your first accident will still be listed on your driving record. It does not vanish when your insurance company forgives you. When a second accident occurs, it too is added to your record, which drives your premiums skyward. There are policies that will forgive multiple collisions, but the rates attached to them tend to be very high.
The Case For Comparison Shopping Auto Insurers
As with most facets of car insurance coverage, the amount you can expect to pay for accident forgiveness will vary by insurer. For this reason, take the time to compare quotes from multiple companies. You may find that this feature can be added to your other coverages without a significant increase in your premiums.