First Accident Forgiveness And Your Car Insurance
Many car insurance companies, due to intense competition and marketing, have been offering their policyholders first accident forgiveness. Accident forgiveness is a concept where the insurance company will maintain your affordable car insurance rates even after your first at-fault car accident, saving the customer from a huge increase in premiums.
However, car insurance companies have gone about providing this additional policy option in different ways, so it is important for customers to read their policies and ask their insurance company questions before agreeing. A couple essential questions to ask yourself are, is this policy option now a part of all standard policies issued by the car insurance company, or is it an add-on to my existing policy that I will have to pay for? If it is an added on option, what is the price of it and is it really worth it for someone in my situation and past driving history?
How Much Will An Accident Affect My Car Insurance Rate?
After an auto accident where you are at-fault, obviously the auto insurance company will associate you with more risk and increase your car insurance. Standard procedure at most auto insurance companies is to raise your rates by an average of 40% of their base, minimum rate. However, some car insurance companies have begun raising rates by 40% on your current car insurance rates. This is a huge difference.
For example, an insurance company’s minimum rate may be $600 and a 40% increase will result in your rates going up $160, whereas if your current insurance rates are about $1,500, a 40% increase on it will add $600 to your annual premium. Unfortunately, regardless of your car insurance company’s standard policy on the issue, a policyholder will forego any cheap car insurance rates they were receiving and start paying more.
Your Car Insurance Company and Accident Forgiveness
To make a decision on whether Accident Forgiveness is right for you, you will have to find out the cost benefits associated with your potential risk and how your auto insurance company calculates rate hikes. First ask if your insurance company offers this service, how it plays into your policy, and what are the costs associated with it. Depending on the specific answers you receive, you will realize whether this plan makes financial sense to you. If you currently pay $1,000 annually and your car insurance company’s base rate is $500, you can expect that your rates will increase anywhere between $200 and $400 after an accident. If Accident Forgiveness is free, then this is certainly a great way to keep your car insurance rates cheap and affordable.
However, if it is going to increase your premiums significantly, you must consider what kind of driver you are and the chances of you getting into an accident. If you haven’t received a speeding ticket in years and are a very cautious driver, don’t bother, whereas a driver who is consistently receiving traffic citations may consider investing in this policy option.
Restrictions and Limitations of Accident Forgiveness: The Fine Print
Some car insurance companies may require driver’s to be long-term customers, stay accident-free for three years, or to have a clean driving credit/history, while others allow policyholders the benefits of this service immediately. If your auto insurance company does have certain requirements to qualify for Accident Forgiveness, beware of the time period you must wait before being eligible, as three years may be a long time to wait for an insurance plan benefit you will have to pay premiums for in the meantime.
Car Insurance Rate Quotes
Car insurance can be complicated, especially with the dozens of different policies, coverage options, and pricing plans car insurance companies have come up with. MyCarInsuranceRates.com is here to help drivers and policyholders find and compare the best car insurance rates and plans for you or your family’s needs. Before making a car insurance purchase, adding coverage like Accident Forgiveness, or switching auto insurance companies, shop around and find the most affordable rates by getting free car insurance quotes. Just enter your zip code and we’ll show you how.
