Should I Get Accident Forgiveness?

What Is Accident Forgiveness?

Accident forgiveness coverage is designed to keep your auto insurance rates from increasing after an accident—even if you're at fault. Ideally, the policy might help you save money on premiums if an accident disrupts your clean driving record. According to data from Insurify, insurance premiums typically go up about 43% on average after an at-fault accident.

However, this coverage may look different depending on your insurance company. Some insurers provide accident forgiveness for free to reward you for maintaining your policy with a clean driving record for several years. Others offer forgiveness as optional coverage you can purchase.

For example, Liberty Mutual forgives your first accident and won't raise your rates if you're accident-free for five years, even if Liberty Mutual wasn't your insurer for some of that time.

Meanwhile, Progressive offers a three-tiered accident forgiveness program:

• Small accident forgiveness: Included for new customers and covers your first accident up to $500.
• Large accident forgiveness: Covers any accident if you have a clean record and the carrier has insured you for at least five years.
• Optional accident forgiveness: You can also purchase additional accident forgiveness through the company's loyalty rewards program.

Contact your insurer to see it's already included in your policy or you have to purchase it. Depending on the state you live in, accident forgiveness may not be available at all.

Learn more: What Auto Insurance Providers Offer Accident Forgiveness?

Pros and Cons of Accident Forgiveness

While accident forgiveness can be a valuable option to avoid a premium hike following an accident, consider the pros and cons to help you decide if it's right for you.

Should I Get Accident Forgiveness?

Like most financial decisions, whether or not you should get accident forgiveness will depend on your situation and whether the policy's benefits outweigh its downsides.

When Accident Forgiveness May Be Worth It

Opting for accident forgiveness may be a good idea in certain scenarios, such as:

• When your insurer automatically includes accident coverage in your policy as a no-cost loyalty reward for being a longtime policyholder with a stellar driving record.
• When the cost of accident forgiveness is minimal and less than the increase in premiums you'd pay after an accident.
• When you're a high-mileage driver and are more likely to get into an accident.
• When you want the peace of mind of knowing your rates won't spike if you get in an accident.

When Accident Forgiveness May Not Be Worth It

Accident forgiveness might not make sense in some cases, including:

• When your insurer doesn't offer accident forgiveness for free, and you'd have to pay extra for this optional coverage.
• When the long-term cost of the add-on is more than the rate increase from an at-fault accident.
• When you rarely drive, and your odds of getting into an accident are less likely.

Example: Let's say you pay $2,304 annually, or $192 per month, for car insurance—the national average, according to Experian data. If you have an accident in your driving record, your rate could jump by 20.30% on average, according to Experian. In that case, your monthly premium would go up by $22 each month or $268 annually.

Meanwhile, accident forgiveness typically costs less than 5% of your annual premium. If we use the full 5%, it would equal roughly $115 per year. In this case, you'd pay less for accident forgiveness coverage than you would in higher premiums on an annual basis. Over several years, however, the cost of accident forgiveness adds up. Bear in mind, your costs could vary depending on your insurer, so always run the numbers to make sure they make sense for your situation.

How to Lower Car Insurance After an Accident

Accident forgiveness coverage can help you avoid higher premiums after an accident, but there are other steps you can take to keep your rates affordable, such as:

Raise Your Deductible

Your policy deductible is the amount you'd need to pay out of pocket before your insurance kicks in to cover a claim. Deductibles generally range from $0 to $2,500, and choosing a higher deductible typically lowers your rates. Just be sure not to raise your rate so high you'd have trouble paying for it after an accident.

Reduce Your Coverage

While nearly every state requires you to carry liability insurance, you may be able to drop other optional coverages. For example, you may not need comprehensive and collision coverage if you drive an older car and the cost of coverage is close to or exceeds its replacement value. Review your policy to spot coverage you may not need anymore, such as rental car reimbursement, roadside assistance or windshield and glass coverage.

Take a Defensive Driving Course

Many auto insurance companies will discount your rate if you complete an accredited defensive driving course. In some states, taking a course can also remove points from your driver's license, which may help to lower your rates. Before signing up, check with your insurer to see if they offer a discount.

Switch to Usage-Based Insurance

While you're at it, ask your provider if they offer usage-based coverage, such as pay-per-mile car insurance, based on the number of miles you drive or your safe driving habits. Your insurer may install a telematics device in your car or use a mobile app to track your mileage or driving behavior. This option could help you save money if you don't drive often and have a good driving record.

Look for Discounts

Check with your insurer to see what discounts you're eligible for that could help you save money. For example, you might qualify for a loyalty discount for maintaining a policy with your insurer for a specific period or a safety features discount for having anti-lock brakes, airbags or anti-theft systems on your car.

Shop and Compare Rates

Your insurer is likely to raise your rates significantly after an accident. Other providers will also factor it in when calculating your rates, but they may offer you lower premiums than your current provider. Experian's free auto insurance comparison tool can help you shop for better rates.

Learn more: How to Lower Your Car Insurance

Improving Your Credit Could Help You Save on Car Insurance

Accident forgiveness could help you save money on your car insurance if you have a clean driving record. This is especially true if your provider automatically includes it in your policy or charges a nominal fee for it, which is less than the premium bump you'd face after an at-fault accident.

Car insurance rates are based on numerous factors, including your age, location, driving record and even your credit. Insurers in most states can use a credit-based insurance score when setting your premiums. Although the score insurers use differs from the one lenders use, it's still a good idea to keep an eye on your credit by regularly checking your Experian credit report and score for free. If necessary, take steps to improve your credit to potentially help you secure a lower car insurance premium.