Accident Forgiveness - How Can Insurance Companies Be So Forgiving?
If you've ever seen any car insurance advertisements, you may have heard of insurance companies providing a service called accident forgiveness. Insurance providers understand that just because you get into an accident, it doesn't necessarily mean you are a bad driver. Accident forgiveness is coverage designed to stop your premium payments from increasing because of one accident. This type of plan has become popular with parents adding children to their policies, as well as car owners who give others permissive use of their vehicles. It can reduce future premiums from rising, this is true, but is it really worth it for you?
First things first, accident forgiveness is not free. If you thought that you could purchase a plan and just be forgiven for the first accident you have, then you were mistaken. When you sign up for your policy, you pay an additional fee to have the coverage, and you can apply it to one accident you have while insured. The rates for this coverage vary from company to company.
If I purchase accident forgiveness and I actually do have an accident, is that accident gone for good?
No. This is a common misperception car owners have about accident forgiveness. Your accident may not count towards your current premiums, but it will count when it is time for your insurance company to renew your policy. Your costs will, more than likely, increase, or you may even be denied coverage. Additionally, even if you switch carriers at your renewal, your accident will still be factored into your quote. Your provider will still assess your risk levels the same way, whether an accident was forgiven or not. I don't know of any insurance company that factors accident forgiveness into a quote for a new policy.
Also, accident forgiveness coverage does not mean that you will be "forgiven" for any prior accidents on your driving record. If you've had an accident and were looking to get cheaper rates, you will have to find other ways to cut costs. The best ways to improve the overall outlook of your driving history are to keep practicing safe driving habits, and improve your credit score.
I understand the goal for consumers who choose this coverage. They want to offset the possible costs of future coverage if they have an accident. What I don't fully understand is how purchasing the accident forgiveness coverage does that. In my opinion it's just not worth it. The little savings you will have will only come if you do have an accident. And if you don't have an accident, then you are just throwing away a bunch of money.
If you already pay high insurance premiums because of past accidents, then I could see how this could possibly benefit you. Another accident could send your costs skyrocketing. In that case, it would be wise to add the coverage. If, however, you have a pretty good driving history, you may save more by not purchasing the insurance.
As always, the choice is yours. There are a few prominent insurance providers who now offer this service. If you are interested in getting it, it may be more affordable than you think. And depending on when you have an accident, it could actually turn out to be a big-money saver. Still, the "forgiveness" may be over when it's time to renew your policy or switch carriers.
Every individual situation is different, and every insurance provider is different too. Speak with your agent about what accident forgiveness means for you, how much it costs, and how the accident forgiveness coverage will affect future insurance policies. Be sure to find out if your accident will count when it's time for renewal. Get a clear understanding of the service before purchasing, and then go from there.
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