Getting in a car accident is no joke. There is often vehicle damage but possibly even personal injury, loss of wages and a lot of financial fallout. On top of all this, you certainly don’t want to pay higher auto insurance rates.
Auto insurance company’s base premiums on risk, and when a car accident happens, you automatically will be classified as a higher risk than someone with no prior accident history. However, depending on what company and type of policy you have, a rate increase may or may not be in your future.
How Much Can Auto Insurance Rates Rise After a Single Accident?
Some drivers see no increase in rates after an accident, while others report up to 40% or more in higher premiums. The hardest part of answering this question is that many factors influence the cost of insurance and each insurer has its different way of accounting for the higher risk. Some companies raise premiums; others take away discounts, while others do both.
There is also a lot of debate about when your rates will increase following a car accident claim. Many drivers report never seeing any change from filing a claim, while others have their premiums adjusted at the first chance a company gets. This is because there are so many variables involved. The only consistent answer is if you get in a car accident, then never be surprised if you get higher rates one day.
What Is Accident Forgiveness – Can This Help Avoid Higher Rates?
Many companies offer Accident forgiveness auto insurance, including Goodtogoinsurance.org, Allstate, Nationwide, State Farm, and more. Although not available to all customers, most good drivers have an option to take advantage of a single accident forgiveness waiver in their policy. An accident forgiveness waiver works because it prevents your rates from increasing due to a single accident within a certain period. Some companies also reward you with a deductible decrease for each year of safe driving accumulated.
How Much Does Accident Forgiveness Cost?
This depends on the company, a new policyholder, for example, have to upgrade to a Gold or Platinum level plan, and both of these plans cost anywhere from 8 to 15% higher than standard plans. Other companies charge an additional fee for this while others do not have a set rate; however, you can bet some premium cost is factored in for providing this benefit.
“The more important question is what it costs NOT to have accident forgiveness as part of your policy.”
Car accidents happen, and sometimes, even the best drivers can’t avoid getting sideswiped by a distracted driver. However, with a potential rate increase from your current insurance and no longer eligible to qualify as a good driver from other insurers, it’s almost always worth the money to have accident forgiveness auto insurance.
Why Is Accident Forgiveness Not Offered to Every Driver?
Who created accident forgiveness to minimize the risk of higher rates to good drivers for an additional premium. Companies have no obligation to protect you from higher rates, and accident forgiveness is just another product aimed to reward a select group of drivers with the best profile. It’s just another example of how people with the best risk profiles always get the better options – auto insurance, credit cards or anything else.
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However, the insurance industry is constantly changing, and more options like accident forgiveness are being made available to drivers of all risk profiles. Learn more about your options today and find companies who can explain your choices.
