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Learn More About Accident Forgiveness

In auto insurance advertising nowadays, the term "accident forgiveness" is bandied about quite frequently, but few insurers really spend any time in their marketing campaigns explaining what accident forgiveness is or what effects it can have on your personal auto insurance policy. Accident forgiveness can be a very attractive feature capable of saving you a great deal of money over the long haul if you are ever involved in a car accident while insured with a policy including this coverage feature. But there are limits and potential drawbacks to the concept of accident forgiveness as well, and you should take a look at the whole picture before deciding whether this type of coverage endorsement is right for you.

What is Accident Forgiveness in Car Insurance Coverage?

On a basic level, accident forgiveness in car insurance coverage is exactly what its name implies. If you have a car insurance policy with an accident forgiveness endorsement and you get into a car accident, you will be protected to a certain extent from rate increases on your coverage stemming from the accident; in short, you will be "forgiven" for an accident for which you were found to be at-fault.

Specifically, accident forgiveness limits the effects of an at-fault accident on your driving record rating with your insurance provider. The concept is based upon car insurance carriers' recognition of policy holders' fears of having their rates jacked up on them after a car accident. Under accident forgiveness, if you are involved in a car accident for which you are found to be at fault, car insurance accident forgiveness ensures that your driving record rating will not fall all the way to the lowest possible level.

What are the Advantages of Having Accident Forgiveness with Your Insurer?

In an ordinary auto insurance policy with no provision for accident forgiveness, if you get into a car accident and are found to be at fault, your rating might be lowered all the way down. For example, a typical rating system is a six-star system. A driver rated with six stars, one who has a long driving history with no accidents on their record, who gets into an accident and is found liable for the collision might be dropped all the way down to a zero-star rating in certain cases. This drop would invariably result in a huge increase in car insurance premium costs, and possibly even cancellation or non-renewal of your coverage.

With accident forgiveness as an extra endorsement or a standard part of your auto policy, you can have that same accident as a driver previously rated with six stars and not suffer nearly the same consequences to the insurer's rating of your driving record. You may be lowered to five stars or four, or in some cases may not be lowered at all. Regardless of the specifics, with accident forgiveness the consequences of a single accident are significantly reduced, which can add up to substantial financial savings over the long haul. Not just your renewal rates are affected when your driving record rating is changed, but your rates over the course of several years or more. Thus, accident forgiveness could potentially save you a great deal of money.

Accident forgiveness is sometimes included in your auto coverage, and it can sometimes appear as an optional endorsement for which you will pay an additional amount on your premium. When it is included as a standard part of your coverage, accident forgiveness may be offered to you following your first at-fault car accident. Normally this would only occur if you have a previously clean driving record, meaning no tickets as well as no previous accidents. In this scenario, if accident forgiveness is extended to you from your insurance provider, it will either be total or partial forgiveness. Total forgiveness implies that your rating will not drop as a result of a single accident; while partial forgiveness just means you will be protected from having your rating dropped all the way down, and you may see a one- or two-star rollback in your rating [1].

If you have a clean driving record with no accident history, you can likely choose purchase accident forgiveness coverage as an extra endorsement on your personal auto policy. You can opt for total forgiveness, which maintains the star rating you held prior to an at-fault accident; or total forgiveness plus discount protection, which also protects any of the discounts you may have previously qualified for before the accident appeared on your driving record. Loss of discount savings is often the biggest source of rate increase following an at-fault accident. In many cases, without accident forgiveness, drivers lose some or all of their applicable discounts because without a "good" record of driving, they do not qualify any longer.

Are there Disadvantages to Including Accident Forgiveness in an Auto Policy?

It is clear that accident forgiveness does have its advantages, but there are some important things to remember when considering taking on this type of coverage. First of all, whether you are directly paying for it or not, accident forgiveness coverage does cost money. If you are on a tight budget, an accident forgiveness policy may end up being out of your price range. This does not mean you shouldn't bother getting a price or two on this type of coverage, however. It is always a good idea to price out a variety of coverage options so that you can make an informed choice on the coverage option that works best for you.

Another thing to keep in mind is that accident forgiveness does not "transfer". That is, if you ever decide to switch insurance providers, you must inform the new insurer of any accidents you may have had [1]. They are not wiped clean of your record even with accident forgiveness. Your particular accident is just treated as if it did not happen by a company that grants you accident forgiveness when they come up with your policy premium renewal numbers.

A great tip many drivers are unaware of is that some insurance companies will offer accident forgiveness to drivers to get them to switch their coverage. If you have insurance through a provider that does not offer accident forgiveness and you have had a recent accident, it is possible you could get your accident "forgiven" by another company. With so many companies out there fighting for every customer, do not lose sight of the fact that insurance companies need your money as much as you need their coverage.

Take a look around if your company increases your rates after an accident. You might find that there is a company out there who will overlook the accident and sell you a policy with accident forgiveness built in, potentially saving you a great deal of money while the accident is still on your driving record. Above all, drive within the rules of the road and always be aware of the importance of maintaining a clean record for the long-term savings it can bring you-and to keep yourself and others safe out on the road. Saving money is one thing, but safety is even more important.

[1] http://www.kanetix.ca/ic_auto_info_auto_articles_46 Retrieved 2009-12-12.

 

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