subject: Car Owner's 5-minute Guide To Accident Forgiveness [print this page] Car Owner's 5-minute Guide To Accident Forgiveness
One of the grim realities of driving is that you should expect the unexpected. It's just a part of life that you'll probably get into a traffic altercation at some point. You rely on your auto insurance to shelter you from the liabilities involved in such circumstances. Unfortunately, when you are at fault for a collision, the consequences are usually costly. Once you've filed an auto insurance claim, you can expect to hear of a rate increase.
Accident forgiveness is a relatively new concept that's been quickly gaining traction with Canadian insurance companies. Below, we'll explain how it works, how to add it to your coverage, and whether taking advantage of it wipes clean your driving record.
How The Coverage Feature Works
Suppose you change lanes, and fail to notice that the lane into which you're moving is occupied by another driver. As a result, your car collides into her vehicle, causing damage to both. Normally, after your insurance company pays for repairs, your rates will increase to reflect a new risk rating assigned to your policy. In some cases, a high rating can plummet, sending your premiums through the proverbial roof.
With accident forgiveness, your insurer may be willing to reduce your risk rating by only one or two notches rather than several. This will help minimize the impact of the accident on your rates. They may still rise, but only marginally, which essentially spares you the high costs associated with causing an accident.
How To Add Accident Forgiveness To Your Policy
Many car insurance companies include accident forgiveness as a default feature on select policies. It is typically reserved for drivers who have never caused an at-fault accident, and have no traffic violations or tickets on their driving record. They pose a low risk of filing future claims to the insurer. If the driver causes a minor collision, the insurer may decide to "forgive" the incident.
Forgiveness can come in different forms. Your insurer may decide to keep your risk rating and rates at their current level. Or, they may lower your rating slightly, which raises your rates (again, slightly).
Some insurance companies do not extend this feature automatically. Instead, they offer it as an endorsement the consumer can add to his or her policy for a small fee. Here, too, the endorsement is typically reserved for motorists who have a blemish-free driving record. If you cause a first-time collision, this feature will "activate," and the incident will be forgiven.
Does The Feature Offer A Clean Slate?
It is important to clarify how accident forgiveness affects your driving record and policy. If you cause a collision, the incident will still be placed on your record, regardless of whether your insurer forgives the event. This can have long-term consequences.
For example, suppose you realize your current car insurance company is failing to meet your needs, and thus it's time to find a new insurer. The new company will ask whether you have any accidents on your record. You are required to inform them of the forgiven incident (they will discover it when they request a copy of your record). Here, the collision will continue to influence your ability to find low auto insurance rates for years. Moreover, your new insurer is unlikely to extend accident forgiveness to you, given your driving record.
Another consequence of an at-fault accident - forgiven or otherwise - is that it places your discounts in jeopardy. For instance, you may currently enjoy a discount for keeping your driving record free of tickets and accidents. If you cause a collision your insurance company forgives, you may still lose the discount. It's worth noting that if you purchase this feature as an endorsement, your discounts may be shielded. The decision rests with your insurer.
The Second Accident And Beyond
In most cases, accident forgiveness is only extended for your first incident. The feature is stripped from your policy following a first-time at-fault collision. If you cause a second (or third) accident, your rates will be affected in the same way they normally would without the protection.
If you're considering switching to a new auto insurance company, look for this feature. A lot of insurers offer it in order to stay competitive. You may find that being forgiven for a first-time at-fault collision can save you a significant amount of money in the long run.
