What Is Accident Forgiveness? Can an Insurer Really Forget a Crash?

Last Updated on July 17, 2019

A few years ago, if you were in a car accident, your premiums inevitably went up.

Then, something miraculous happened.

Car insurance companies began advertising that they would ignore or “forgive” that accident and not penalize you with higher premiums.

accident forgivenessOne notable company is Liberty Mutual. As one of the first companies to blatantly tell you that if your insurer charges you more for an accident you need a new insurance company, they started a trend that rolled into almost a standard offering with every insurer.

The idea of having a claim not held against you is great. After all, you are loyal to your insurer, pay your premiums on time, and after years of that loyalty, you get slapped with a hefty new premium because you were too busy daydreaming and rear-ended a vehicle in front of you.

While the idea sounds great, there are catches to note. Also, not all companies offer accident forgiveness, and some are breaking state laws by doing so – remember the infamous Allstate $600,000 lesson? Therefore, it’s time to become an informed consumer, know when this service applies, and whether you qualify before assuming you can unlock the automatic forgiveness in your next accident.

What is Accident Forgiveness?

Accident forgiveness is an auto insurance policy feature that protects you from higher premiums. Essentially, your driving record in their rating system is preserved for that single at-fault incident, and your premiums stay the same.

This is accident forgiveness in its most basic form. Every insurer has specifics to what they forgive, situations not covered, and qualifications. For example, being at fault for a DUI accident is often excluded by insurers.

Accident forgiveness only applies to the insurance company – not your driving record. The accident still shows on your permanent driving record which means if you swap insurers, they may not be as kind on your premiums.

The Benefits of Accident Forgiveness

Everyone is at risk for an accident. The average person is likely to be in a crash every 17.9 years. Whether you are at fault for that incident or not is another story. Regardless, you can be the safest driver and have a slip-up. Therefore, the most significant benefit is that you are not penalized for that moment.

The Disadvantages of Accident Forgiveness

Unfortunately, there are a few cons, but these are on a case-by-case basis. Some disadvantages to these policies include:

  • Your Insurance Company May Charge You for It: Not all insurers offer this free. Instead, they charge you a monthly fee for the forgiveness. In the end, you might pay more for a “what if” policy than dealing with a rate increase.
  • Your Driving Record Stays the Same: Your insurer forgave you, but your driving record has not changed, which means new insurance companies will increase your rates and consider you a higher risk.
  • You Might Not Even Pay Much for an Increase: If you have a clean driving record already, then the increase for a single at-fault accident might put you more at the average – but barely affect your monthly rates.
  • Your Insurance Company Might Drop Rather than Forgive: In a severe accident, your insurer might drop you rather than forgive your accident. Therefore, you could be paying for additional coverage without any actual savings.

What Insurance Companies Offer Accident Forgiveness?

You have some leading car insurance companies who offer this program but realize that your state dictates whether they can provide it legally. Some states, such as California, restrict accident forgiveness plans.

Insurers who offer the program include:

  • Allstate: Allstate has the program as part of their Choice Auto Policy. You get discounts for having a good driving record, and you receive a discount for every six months you go without accidents – on top of the forgiveness option.
  • Progressive: Progressive uses a loyalty rewards program as their accident forgiveness. Smaller accidents are forgiven, but major accidents are not included.
  • USAA: USAA is insurance exclusive to veterans and their families, and you can add the program to your existing policy for under $1 per month.
  • Nationwide: Nationwide has accident forgiveness, but only in specific states. You can extend it to other drivers on your policy too, such as teen drivers. However, you only get one forgiveness per policy – not per driver.
  • Liberty Mutual: You receive accident forgiveness as a standard component in your policy, but it only applies to the first at-fault incident. You cannot use this in California or North Carolina.
  • GEICO: GEICO only awards certain policyholders after they reach an anniversary milestone with the company and maintain a safe driving record for a specified number of months. You can purchase the policy too when you first sign up or when you renew, but not in between.
  • The Hartford: You get first accident forgiveness through The Hartford as part of their Advantage Plus package. If you do not have this package, you do not have forgiveness included.

Read the Fine Print

A company may offer forgiveness, but as you can see, there are limitations. Some companies only provide it after you have had a spotless record for months, while others only offer it after you have been a loyal customer for a specific number of months.

Also, most of the companies offering this coverage require you to purchase a higher insurance plan, which means it really isn’t free, and you are already paying more than necessary in some cases. Therefore, consider the costs of buying insurance for insurance and then decide if it is truly right for you and your driving history.

Accident forgiveness could be a good option for your insurance, but only when it makes financial sense. Some things to consider before opting in or going with an insurer solely for the program include:

  • How long must you be a customer before it unlocks?
  • How much more will you pay per month to add on the service?
  • How much more will you pay per month to upgrade to an insurance package that has it?
  • How much would you pay for a single accident?

Once you consider the facts, then you can better decide if accident forgiveness is worth it.

James Shaffer
James Shaffer James Shaffer is a writer for InsurancePanda.com and a well-seasoned auto insurance industry veteran. He has a deep knowledge of insurance rules and regulations and is passionate about helping drivers save money on auto insurance. He is responsible for researching and writing about anything auto insurance-related. He holds a bachelor's degree from Bentley University and his work has been quoted by NBC News, CNN, and The Washington Post.
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