Is Accident Forgiveness Worth It?

The biggest pros and cons of accident forgiveness are that while an accident forgiveness policy means an insurance company won't raise your auto insurance rate after your first accident, you're essentially paying more money for the same coverage. Having a good driving record - meaning little to no accidents in your driving history - means you already pay lower rates for auto insurance, and accident forgiveness can seem like buying insurance for your car insurance policy. If you really want to save money on car insurance, comparison shop online with our free insurance quote comparison tool below.

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Rachel Bodine graduated from college with a BA in English. She has since worked as a Feature Writer in the insurance industry and gained a deep knowledge of state and countrywide insurance laws and rates. Her research and writing focus on helping readers understand their insurance coverage and how to find savings. Her expert advice on insurance has been featured on sites like PhotoEnforced, All...

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insurance...

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Reviewed by Leslie Kasperowicz
Farmers CSR for 4 Years

UPDATED: Aug 17, 2021

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There are few things worse than getting into a car accident. Not only do you have to deal with the driver of the other vehicle, the police, and the hospital, you also have to worry about whether or not your insurance premiums will go up. So, if you are asking “why did my car insurance go up,” depending on the accident severity, adding a single incident to your driving record can cause your car insurance rate to jump by up to 50%. Thankfully, auto insurance companies are beginning to introduce safety-nets to their customers so that a single accident will not send your car insurance premium sky-high.

If you do not live under a rock, you may have seen big auto insurance companies like Allstate and State Farm advertise something called “accident forgiveness.”  Accident forgiveness, like the name suggests, forgives customers for having an accident.  This means that if you add-on accident forgiveness to your auto insurance policy, your auto insurance rates will not increase if you are at-fault for an accident.  (The caveat here being that this is usually a one time deal and only is valid for one accident per policy.)

Drivers who are not so confident in their driving skills, or parents who are insuring risky teen drivers, would be intelligent to consider adding this additional coverage to their policy.  For good drivers (you know who you are?), adding on accident forgiveness might not be the best idea as it would appear to be just “money down the drain.”  Buying more annual or monthly insurance than you need can be quite wasteful, some claim. But who is to say if buying accident forgiveness coverage is actually worth it?  Below, we will help you decide.

How Accident Forgiveness Actually Works

In general, accident forgiveness works like this – if you have a clean driving history with your insurer, they will ignore the first accident on your record and not raise your premium rates.

The details of each insurer’s accident forgiveness policy, of course, depend on that insurer.  Some insurers offer accident forgiveness add-ons to new customers while others only offer accident forgiveness to loyal customers who have been with the car insurance carrier or company for years.  Some insurers will only forgive one accident in a certain time frame (usually 1-3 years), while others will forgive multiple accidents in that same time frame.

Additionally, if you happen to get into an auto accident while having accident forgiveness on your policy, and you do not follow up that accident with additional collisions, your insurance coverage rates will continue to drop by as much as $100 for every year you maintain a clean record.

Again, the fine print varies from company to company. To find out whether or not you qualify, it is best to speak with a representative from your insurance company.

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The “Cons” Of Accident Forgiveness

Many critics of this type of insurance claim that its just another way to insurance companies to squeeze money from their clients.  They say that “accident forgiveness” is just paying more money for the same coverage.  In other words, it’s simply “buying insurance for your insurance.”

By buying an auto insurance policy, you are paying the auto insurance company or insurance provider to protect you in case you get into an accident.  Critics say that by adding on accident forgiveness, you are buying an auto insurance policy in addition to an accident forgiveness policy to protect you in case you get into an auto accident.  They say its superfluous.

The same critics will also argue that consumers with clean driving records will not benefit from this type of add-on.  By adding accident forgiveness, they are just wasting money, as they should already have very low insurance rates to begin with.

Finally, many insurance companies claim they will not increase your insurance rates after an accident if you have accident forgiveness on your policy.  That does not mean, however, that they will not drop you as a client if the accident you get into is severe enough to cause the insurance company a massive expense.  This means that although you may have saved some money by purchasing accident forgiveness, you are now stuck without an auto insurance company to insure you!

The “Pros” Of Accident Forgiveness

Even if you are a safe driver, you still are in danger of getting into a car accident.  Because of this, it still can be worth it to cover the unthinkable.  Most accident forgiveness policies will not “break the bank” and can be added to your policy for less than $30 a month.  Some insurance companies even give their customers accident forgiveness for no additional fee.

The best method of determining whether or not accident forgiveness insurance is suitable for you is to see how much an insurance company would raise your rates after an accident. Each car insurance company or auto insurer has a schedule which outlines the rate hikes following an at-fault accident.  Often times, you will find that insurance companies can and will raise your rates to off-the-chart levels after you cause an automobile accident.  Because of this, it often makes sense for many people to pay the extra few bucks to get accident forgiveness added to your policy.  After all, could you really afford a $300/month auto insurance premium?

As with any other major purchase you make in life, the best thing to prevent making a poor decision is education.  Look at your insurance rates and make some price comparisons.  Talk to your insurance agent to see if accident forgiveness makes sense for your situation.  Accident forgiveness isn’t for everybody, for some people, it can make a world of difference.


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