If you are new to car insurance, you may not have heard about accident forgiveness, yet. This is basically the offer that auto insurance companies give to their potential and existing policyholders to keep their premiums down if ever they cause an accident.
Being at fault in a car accident will surely spike up premium rates, so accident forgiveness can be very appealing. Some carriers charge extra to have it on your policy, some give it as a reward. Let’s look at the facts about this option to learn why it’s not exactly that great.
Not much to split the premium hike and forgiveness fee
Studies have shown, that if a driver has been found at fault during a car accident, their premiums are bound to increase up to more or less 44% or $566, for the year. Those who opt for accident forgiveness will have to pay an additional amount, around 2-9%. It may not seem like much, but over the years, this amount adds up. So, if you are a very careful driver and you can avoid being involved in an accident, especially, causing an accident, you may not need this option, to begin with.
Accident forgiveness isn’t really free
There are companies who offer accident forgiveness as a free perk for their existing policyholder that have a clean driving record. Sounds nice, right? Not exactly. To be honest, the fee that you could’ve been charged for is already embedded in your car insurance premium.
If your carrier is honest with the charges, you may have already paid for it by keeping a clean record all these years under their coverage. Having no claims saves the insurance company a lot of money, so in a way, you’ve already paid for it.
The logic of it is flawed
In the state of California, auto insurance companies are not offering accident forgiveness as an option to the policy for an extra charge. They are afraid to be under scrutiny as the California Insurance Commissioner’s office has already got their eye on this option. They did not like the logic that policyholders will be paying for an accident that didn’t happen yet or may not even happen at all.