Have you noticed how some insurance companies promote "accident forgiveness" as a key selling feature? This is no accident in itself. Insurance companies know that drivers are fearful of the financial consequences of being in even the most minor of fender benders - that's why they're re-introducing, and promoting, accident forgiveness.

What is accident forgiveness?

If you are involved in an at-fault accident, accident forgiveness protects your driving record from falling to the bottom of the insurer's rating system. For example, if your insurer uses the common 6-star rating system and you have an at-fault accident, your "star rating" might drop down to a 0-star designation. If you were previously a 6-star driver this means your rates will significantly increase. However, with accident forgiveness your star rating will not fall as much, if at all.

By protecting your standing on the 'star rating' system, accident forgiveness results in a break on your auto insurance premium that you would otherwise have to pay if it did not exist.

Who can get accident forgiveness?

In short, the availability of accident forgiveness varies by company. If available, it is simply as a built-in feature of an insurer's auto insurance coverage, or is purchased as an endorsement on the policy.

1. Accident Forgiveness - As a built-in feature of the regular coverage

Accident forgiveness may be offered after you've had your first "at-fault" accident but usually only if you had a previously clean driving record (no accidents or tickets). Although you can inquire about it, the insurer will ultimately decide whether or not your accident will be forgiven.

If your insurance company agrees to 'forgive' your accident, it will likely fall within one of the following scenarios:

  • Total forgiveness where you will not see an increase in your auto insurance premium because of a lowering in your star rating.

  • Partial forgiveness where your star rating will drop to a 5 or 4-star position instead of down to 0. Your insurance rates will increase because of this re-positioning, but nowhere near as much as they would have if the insurer did not offer accident forgiveness.
Total or partial forgiveness of an accident will save you money. There's no doubt about it. But while accident forgiveness protects your position on the star rating system, it does not protect the discounts you may have accumulated over the years: You could lose valuable discounts that come with being accident or claims-free.

2. Accident Forgiveness - Purchased as an endorsement

Accident forgiveness packages can be bought from some insurance companies, but usually only if you currently have a clean driving record with no accidents or tickets. There are two common types of packages:

  • Total forgiveness where your star rating will be maintained in the same position as it was prior to the at-fault accident.

  • Total forgiveness plus the protection of your discounts where your star position will be maintained AND you get to keep the discounts you have accumulated over the years.

Insurance Tip - It may be forgiven, but it is not forgotten!

Whether you have bought an endorsement that incorporates accident forgiveness into your policy or the insurer has offered it to you, you must inform any new insurer of all accidents - forgiven or not. Having an accident "forgiven" by an insurance company does not mean the accident is omitted from your driving record. The accident is on your driving record even though the insurer offering the "forgiveness" may not currently consider it when calculating your auto insurance premium.

So what's your next step now that you know about accident forgiveness?

If you have never been in an accident (knock on wood), check with your current insurer to see what their policies are on accident forgiveness. If they don't offer it, you may wish to consider switching to one that does. It could save you thousands of dollars should you ever find yourself with an at-fault accident on your driving record.

Always shop around and compare quotes when you need to get auto insurance - whether it's because you've bought a new vehicle or are simply going to renew an existing policy - to make sure you are getting the best price possible. Don't forget to ask about the little "extras", like accident forgiveness, that may come with your policy or can be purchased - they could save you thousands of dollars in the long term.

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* The information contained within this article is subject to change. Always speak with your current insurance supplier, or a licensed insurance representative, to answer your specific questions. The information collected and compiled here is intended to simply act as a guide.

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