Accident Forgiveness Car Insurance: Sensible or Silly?

Accident forgiveness plans are add-on coverage options that allow you to keep your current insurance rate if you are involved in an accident that is your fault. Without an add-on like this, insurance rates usually increase somewhat if you cause an accident. Drivers who qualify for accident forgiveness will not see a rate increase unless they have more than one at-fault accident. Companies usually offer accident forgiveness to drivers who have three or more years without claims against their policies.

Details Vary Between Insurance Companies

Each insurance company has different rules when it comes to accident forgiveness. Some companies offer the coverage as soon as you purchase your first insurance policy. Other companies can make you wait up to five years before you become eligible for accident forgiveness. Some policies might require that you drive for three to five years without any traffic tickets. Talk to your insurance representative to find out exactly what the terms are for accident forgiveness on your car insurance policy.

Coverage Comes with More Expensive Policies

Although companies often tout accident forgiveness as a discount or customer benefit, it’s rarely free. Many insurance companies only offer the coverage to customers who purchase upper level expensive policies. Because accident forgiveness is an add-on to your traditional insurance coverage, you will have to pay an extra fee to carry the coverage, regardless of which company sells you the policy. Look at the fine print to determine whether you qualify for the coverage first. Then look to see what kind of difference the coverage will make on your regular insurance bill.

Paying More for Coverage You Might not Use

It’s ironic that only those who don’t need accident forgiveness can qualify for it. Safe drivers don’t generally need accident forgiveness. If you managed to drive for five years without as much as a traffic ticket, the odds are low that you will cause an accident in the near future. Since accident forgiveness coverage only kicks in after you cause an accident, you could spend years paying for extra coverage and never need to use it.

Pay Now or Pay Later

When you take on the extra cost of an accident forgiveness policy, you are essentially paying over time for the potential cost of rising insurance rates if you were involved in an accident. Your rates may not rise after your first accident, but they will rise immediately when you sign up for the additional coverage. In fact, if you manage to avoid accidents for several years, the additional cost of accident insurance coverage could eventually exceed the amount you would have had to pay for your accident in the first place.

Accident forgiveness is a great marketing tool, but it is not a good add-on for safe drivers. Most drivers who qualify will only end up paying more than they would if an at-fault accident increased their insurance rates.

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