Accident forgiveness in car insurance policies provides significant cost savings for some drivers, but isn't right for everyone. Here's how to tell what is right for you.

Written by Tom Tennant on January 12, 2011 & Posted in Auto Insurance

Accident forgiveness: automobile insurance come-on or cost saver?

The sales pitch sounds too good to be true: "Car accident? No problem. With accident forgiveness, your car insurance rate stays the same!" As with anything else, it's best to develop an understanding of what accident forgiveness really is, and then decide if it's right for you.

Accident forgiveness defined

Accident forgiveness coverage is a provision that calls on your car insurance company to process your first at-fault accident claim without raising your premium. That's is a potentially big savings because post-accident drivers sometimes see their annual auto insurance rates shoot up nearly 40 percent, according to Consumer Reports.

There are a couple stipulations, however. First, accident forgiveness coverage is often considered an add-on feature to a standard car insurance policy, and will likely increase your premium. So if you are seeking cheap car insurance because your budget is tight, weigh carefully whether the possibility of savings on a claim in the future outweighs the advantage of a lower auto insurance rates right now.

Second, accident forgiveness coverage isn't available to every driver. A newer customer, younger driver or someone with an ugly driving record might have a tough time getting covered.

Do you fit the accident forgiveness profile?

Let's find out whether you are right for accident forgiveness. If you're a parent with a teenage driver, this coverage seems like a no-brainer. After all, teens are the some of the most dangerous drivers on the road, according to the National Highway Traffic Safety Administration. Insurance companies know this, and they expect younger drivers to get into a fender bender or two. That's why, when you add a teen driver, auto insurance companies compensate for increased risk by increasing your premium, often significantly. The increases auto insurance companies take when a teenage driver is added also means your rate will likely stay the same after your teen's first minor accident. Insurance companies expect it. It's almost like built-in accident forgiveness. So find out what your insurer's policy is before you add accident forgiveness coverage on top of a new driver increase.

If you have a spotty driving record and you're likely to get into another accident in the future, accident forgiveness coverage looks great. But a lot of drivers are ineligible for exactly that reason. Most insurance companies require a clean driving record - no accidents, no tickets - over the past five years before they'll give a driver accident forgiveness.

If you're a safe driver with a clean record and a solid car insurance policy, then accident forgiveness coverage may do little more than add monthly expense. And, if you do have a minor accident and see your premium increase, you have options. Talk with your insurer and compare car insurance quotes from other car insurance companies. You may find a better rate even after your fender bender.

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