Getting in a car accident is no joke. Not only is there 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 their own different way of accounting for the higher risk. Some companies simply raise premiums, others take away discounts while others do a combination of both.
There is also a lot of debate as to 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 very first chance a company gets. 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?
Accident forgiveness auto insurance is offered by many companies 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. How an accident forgiveness waiver works are it prevents your rates from increasing as a result of a single accident within a certain period of time. 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 kind of 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 even the best drivers can’t avoid getting sideswiped by a distracted driver sometimes. With a potential rate increase from your current insurance and no longer eligible to qualify as a good driver from other insurers then it’s almost always worth the money to have accident forgiveness auto insurance.
Why Is Accident Forgiveness Not Offered to Every Driver?
Accident forgiveness was created 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 – whether that is auto insurance, credit cards or anything else.
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.
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