Accident Forgiveness: What to Know
With holiday travel causing increased traffic, it might be a wise time to consider an accident forgiveness option on your auto insurance, at least according to the National Association of Insurance Commissioners (NAIC). Many insurers are advertising such programs, but NAIC warns that not all are created equal, and cautions customers to be informed.
It's no secret that any auto accident can result in both repair costs and increased insurance premiums, which is why accident forgiveness programs were created. Basically, such an option can prevent premium increases for covered drivers who are involved in at-fault accidents. While this may seem like a "get out of jail free" card, there are actually several conditions and limitations associated with these programs.
When considering an accident forgiveness option, here are some questions every driver should ask:
- Is there a cost for such a program? While some insurers now offer accident forgiveness as part of their standard automobile policies, they also charge a higher premium for those policies. More often, accident forgiveness is offered as an additional coverage option - or endorsement - for a fee. Each insurer offers different rates for such endorsements, so check with your existing insurance company as well as others to find the best deal.
- Are there eligibility conditions? Eligibility requirements vary from company to company, but typically include:
- Customer loyalty - a history of maintaining an auto policy with that insurer.
- Driving record - most insurers require a clean record going back several years, including actual accidents and tickets for things like speeding.
The biggest question, of course, is whether or not an accident forgiveness policy makes sense for you. If you're a safe driver with a clean record, already paying standard insurance rates, adding an accident forgiveness endorsement can cost you up to 40% in annual premiums, and may not be worth the money. If, on the other hand, you have a history of violations and are already paying higher rates, adding accident forgiveness may save you in the long run.
Either way, consult your insurance agent for more information before making a decision.
