Accident Forgiveness is a frequently advertised, but seldom understood program. Does it actually mean you can get into an accident and your rates won't go up? It is actually a bit more complex than that. Accident forgiveness programs can vary greatly between states and insurance companies; below we help make clear what some of those differences are.
What Is Accident Forgiveness?
Accident forgiveness programs cancel the increase in rates drivers typically see after they get into an "at-fault" accident. As we explored here, accidents can cost more than your car repair bill. In a five state study, we found rates increased by an average of 33% for a thirty-year-old male after his first accident. If you are younger or do not have a clean record, your rates can go even higher. Essentially, if you were paying $1,000 a year for auto insurance, you would now be paying $1,333 after getting into an accident. Over five years, which is generally the time period it takes for an accident to clear from your insurance record, you spend an extra $1,665.
Furthermore, an accident can disqualify you from discounts companies offer, such as a safe driver discount which could save you up to 25% for some companies.
Who Qualifies for Accident Forgiveness?
The answer depends on what state you live in and what company insurers you. Unlike discounts such as the Good Student Discount, which are standardized, accident forgiveness programs can vary widely. Generally only the larger insurance companies have accident forgiveness programs, but they may not offer them in every state. In Alabama for example, we've seen GEICO, State Farm, Liberty Mutual and Travelers offer it, but Progressive and Allstate do not. Unfortunately, most companies are not very transparent about which states do and do not have a program, so you will need to check with your agent. Here are the qualifications for the major car insurers.
|State Farm||Nine years of safe driving with State Farm required to waive one accident||Not in All States|
|GEICO||Accident Free for 3-5 years, be a GEICO customer for 2-5 years, 5 years driving experience. Other factors can change depending on state||Not in All States|
|Allstate||After five years of clean driving: can choose Standard Your Choice Auto accident forgiveness. Gold and Platinum cost extra but drivers get accident forgiveness immediately||Not in All States|
|Progressive||Will forgive claims under $500 for all customers. For large claims need to have been with Progressive for 5 years and have a clean driving record||Not in All States|
|USAA||Can purchase immediate accident forgiveness in some states or have no accidents for five years under USAA policy to get accident forgiveness||Not in NY, CT, NC, CA|
|Farmers||Comes as an add-on that has to be purchased, but you still need to be a safe driver for three years prior. 1 accident forgiven for every 3 years of clean driving.||In all states|
|Nationwide||Already forgives one accident that does not cause death or damage less than $2,000. Accident forgiveness for big claims can be purchased for $48 extra a year.||In all states|
|Liberty Mutual||Comes standard in policy with no extra charge, but need five years of clean driving. Also at least one driver on policy needs to have five years experience||Not in CA|
|Travelers||Part of the "Responsible Driver Plan", need to be with company for five years and be accident free. Forgives one accident every three years||Not in All States|
|Erie||If you've been with Erie for three years with no accidents, you qualify for its First Accident Forgiveness free of charge. If you have been with Erie for 15 straight years, never charged for an accident again||Not in All States|
Each company has its own rules when it comes to an accident forgiveness program. Insurers such as State Farm are much stricter and typically require nine straight years of clean driving to get just one accident forgiven. For the most part though, the companies will need to see at least three years of clean driving. Companies like Allstate and Farmers make getting the Accident Forgiveness easier for new customers since you may simply purchase the programs for immediate use. GEICO, Progressive, and Travelers make it hard for new customers since their policies require you to be a customer with them for some years.
Accident forgiveness can be a worthwhile choice for any driver if the cost is reasonable. At the end of the day you want to come out ahead and save money with the program, meaning you do not want to pay more for accident forgiveness than what an accident would cost you.
When it comes to auto insurance, you'll want to shop around for the best car insurer in your area, and compare the cost of rates without an accident, rates with accident forgiveness and rates with an accident. You can ask an insurance agent to simulate that for you, or you can even see for yourself by playing around with companies' quoting engines on their website. You don't want to pay $1,500 to Farmer's every year and get automatic accident forgiveness if you can get a GEICO quote for $1,000--unless your rates would increase by over 50% in the event of an accident. Accident forgiveness can save you hundreds and thousands, but make sure it makes sense to spend the money on it in the first place.