The Benefits of a Forgiveness Insurance Policy

Tue, 3/27/2018 - 11:53 pm by Kirsten Rincon

Forgiveness insurance for car accidentAfter a car accident, insurance companies can increase your premiums astronomically. In Massachusetts, the average driver will experience a 67% increase in their rates. This is equivalent to an extra $635 every year. For high risk drivers, rate hikes can be more than double this. To protect drivers from this increase, some auto insurance companies have introduced “forgiveness” auto insurance policies. Although specifics vary across providers, forgiveness auto insurance policies promise to not increase rates after a claim-marker’s first at-fault accident. Forgiveness insurance policies protect drivers from insurance rate increases after an at-fault accident. 

A car accident can remain on your driving record for 10 years, depending on the state in which you reside. Generally, an accident will affect insurance companies’ pricing decision for a period of 5 years. For the average american driver, an accident will cost $1,468 in extra insurance premiums over 5 years. For a high-risk driver in New Jersey, an accident could cost well-beyond $4,667 over the 5-year period following a claim. Drivers can save these additional charges if they are protected by a forgiveness policy. However, forgiveness polices have certain eligibility requirements and are not free.

The Cost of an Accident-Forgiveness Policy

Different providers administer forgiveness policies differently. Some companies offer these policies exclusively to their best customers, with perfect histories, as an incentive. Other companies only include the feature in their premium policies, which come with higher rates than basic coverage. Other companies will offer forgiveness coverage as an optional add-on to their regular policies. Generally, policies that include forgiveness coverage cost between 8-10% more than those that don’t. 

Can an Accident-Forgiveness Policy Save You Money?

For some drivers, a forgiveness policy will be valuable, and for others it will not. Based on the average cost of auto insurance in the U.S.A, a forgiveness policy is estimated to cost $69 a year. On average, an at-fault car accident will increase insurance rates by a total of $1,469. You will have to remain accident-free for 21 years before the amount you spend on forgiveness protection exceeds the cost of one accident. If the average driver is involved in an accident more frequently than once every 21 years, a forgiveness insurance policy will save them money. According to industry research, the average driver is involved in a car accident once every 17.9 years

Although a forgiveness policy protects your rate with your current provider, the accident will still be added to your driving record. Companies reserve the right to discontinue coverage if a driver’s risk is too high. If this is the case, you will have to find a new provider, who will include your accident in their calculations. Some forgiveness policies will protect you from being charged an accident-premium, but forgiveness does not protect “safe-driver status”. Drivers who have been afforded discounts for a period of safe driving could see this discount disappear after an accident, even with a forgiveness policy.

Use the Car Accident Insurance Calculator to determine how much your rates will increase after an accident.

Get an Auto Insurance Quote here to compare rates and determine the cost of a forgiveness policy.