Should you buy an auto insurance policy with accident forgiveness?

Accident forgiveness what you need to know

Auto accidents can be a very stressful ordeal. If no one is seriously hurt, your first worry may well be getting your car fixed. After that, your concern will probably turn to how much your insurance is going to go up.

Some auto insurers offer what’s called “accident forgiveness,” in which case a single wreck won’t (in theory, at least) affect your car insurance premiums.

So, is it worth seeking out a policy with accident forgiveness — even if it means paying more for the premium?

Money expert Clark Howard has some thoughts…

What you need to know about accident forgiveness

The car insurance industry is sustained by the premiums that drivers pay. When there’s an accident, the payout can be costly for them. That’s why your auto insurance premium is almost sure to go up after a crash.

Enter accident forgiveness.

Clark explains: “If you’re with an insurer that does one-time accident forgiveness, your insurance won’t go up.” It’s a product that insurance companies started offering in the last decade or so.

Some insurers offer accident forgiveness as an additional feature, while others include it in their regular policies. Here is a sampling of some major insurance companies that offer accident forgiveness:

Auto insurance companies with accident insurance

	Insurer		Details about their accident forgiveness policy
	AAA		Offered for drivers who haven’t had any accidents and are claim-free for 5 years. You’ll also be forgiven for “small claims” ($250).
	Allstate		Allstate says accident forgiveness “starts the day you sign up” with their Your Choice Auto policy.
	Geico		Geico can reward certain drivers with with accident forgiveness once they’ve reached a milestone anniversary, or it can be purchased. It is not available in California, Connecticut and Massachusetts.
	Liberty Mutual		Offered as an additional coverage for drivers with clean records for 5 years. Not available in all states.
	Nationwide		Offered only in select states and for an additional charge. Also extends to family members on your insurance — but for one accident per policy.
	Progressive		Offered to those who qualify for Progressive’s Loyalty Rewards program.
	USAA		Offered for an additional charge, but free after 5 years with no accidents.
	The Hartford		The Hartford’s Advantage Plus package includes accident forgiveness. All drivers on the policy must have a clean record for 5 years.

So, should you go out of your way to do business with one of these companies?

Clark says that unless accident forgiveness is already a part of the policy you’ve shopped and found to be the best fit for your budget, probably not. Why?

“Because you’re almost certainly paying for that as part of your premium,” Clark says.

That’s because typical accident forgiveness policies are marked up to pay for themselves over five years.

In other words, the money you could be saving by purchasing a plan without accident forgiveness will more than offset the claim you might be “forgiven” for with a policy that includes it.