Accident forgiveness is a feature offered by some auto insurance companies, which will protect drivers from drastic rate hikes in the event that someone on the policy gets into an accident. Some insurance companies offer accident forgiveness for free, as long as you've carried an accident-free policy with them for a set number of years. Other insurers allow you to purchase accident forgiveness as an optional rider to your car insurance policy.
What Is Accident Forgiveness?
When determining your annual rates, car insurance companies consider a number of factors, such as your age, vehicle and location. One of the most important factors to an insurer is your driving history. Experienced drivers with a clean driving record can qualify for substantial insurance discounts and low annual rates. But if such a driver were to cause an accident, they could simultaneously lose some discounts and incur an accident surcharge on their rates. Our research shows that average drivers who cause an accident may see a rate increase of about 33%, which they would have to pay for several years.
For example, let's say you currently enjoy an accident-free discount and pay $1,000 per year for car insurance. If you cause an accident, you would no longer qualify for your accident-free discount, which means your rates may automatically go up when you renew your policy. Additionally, your insurance company will see that you've been involved in an accident and will apply an accident surcharge to your rates, so your rate could increase to as much as $1,333. You would have to pay that increased rate for the next three to five years, typically until your state's department of motor vehicles (DMV) drops it from your driving record. This means that on top of the expenses of the accident itself, your collision could cost you an additional $1,665. However, if you had accident forgiveness as a feature of your car insurance policy, part of this rate increase could be avoided. While you would still disqualify yourself from receiving the accident-free discount, your insurer would not apply an additional penalty to your base rate for having a recent accident on your driving record.
You should know that even if you do have forgiveness as part of your car insurance policy, any accidents you cause will still be recorded on your driving record. This is important because if you choose to switch to a new car insurance company within a few years of the collision, that accident may negatively impact your rates. Furthermore, most accident forgiveness benefits only apply to your first at-fault accident. After your accident forgiveness has been used, any subsequent accidents may increase your premiums. One notable exception to this rule is if your insurance company allows you to purchase an upgraded form of accident forgiveness that covers multiple accidents. For example, if you buy Allstate's platinum accident forgiveness benefit, you may have up to three accidents forgiven before your rates are affected.
How Do I Qualify for Accident Forgiveness?
The necessary qualifications for accident forgiveness vary based on your insurance company and location, but most insurers require you to maintain several years' worth of accident-free driving before adding accident forgiveness to your policy. Accident forgiveness is not offered by every insurance company and, for those that do, it is not necessarily available in every state. Some companies allow you to earn accident forgiveness for free by maintaining a clean driving record. Other insurers allow you to purchase it, or they offer enhanced accident forgiveness as an upgrade to the base benefit.
Here are the accident forgiveness requirements for some major auto insurance companies.
|Allstate||Accident-free for three to five years. Can purchase Gold (one accident) or Platinum (three accidents) accident forgiveness, which takes effect immediately.||Not in every state|
|Farmers Insurance||Available for purchase after you have three years' worth of no accidents.||In all states|
|GEICO||Accident-free for five years, and in some states, you must be over the age of 21. Can be earned or purchased.||Not in CA, CT or MA|
|Liberty Mutual||Accident-free for five years with any insurance company||Not in CA|
|Nationwide||Available for purchase. Extends to other drivers on your policy, but only one accident will be forgiven per policy.||Not in every state|
|Progressive||Accidents that cost under $500 will be forgiven. More substantial accident forgiveness may be obtained if you have been with Progressive for five years and maintain a clean driving record.||Not in every state|
|Travelers||Part of the "Responsible Driver Plan." Includes one forgiven accident and one forgiven traffic violation for every three years of clean driving.||Not in every state|
|Erie Insurance||First Accident Forgiveness is available for free after three years of clean driving with Erie. After 15 years of accident-free driving with Erie, you qualify for Feature 15, which means you'll never see a surcharge for an at-fault accident again.||Not in every state|
|State Farm||Accident-free for nine years under a State Farm policy.||Not in every state|
|USAA||Accident-free for five years under a USAA policy, after which one accident may be forgiven every five years. You may also upgrade so that one accident will be forgiven every three years.||Not in CA or NC. CT and DE may be subject to different rules.|
Other Good Driver Benefits
In addition to accident forgiveness, insurance companies offer several other benefits for drivers with a clean driving record.
- Accident-Free Discount: Some insurance companies, such as State Farm, offer a discount to drivers in certain states for remaining accident-free for at least three years. Additionally, this discount may increase over time if you maintain a clean driving record.
- Vanishing Deductible: For every year you drive without an at-fault accident, your insurance company may lower your deductible a specified amount. For example, the standard deductible for Allstate drivers is $500. However, each year you drive without an accident, Allstate may reduce your deductible by $100. So, if you get into an accident after three years of safe driving, your deductible may be reduced to only $200.
- Good Driving Discount: Some insurance companies will send you a check for a small portion of your policy's annual premium—typically 5%—after six months of driving without an incident.