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Holiday Mishaps:
With more people on the road – and more distractions – the holiday season is the perfect time for consumers to get smart about how accident forgiveness works and decide if it’s a smart choice for them. An accident forgiveness option could prevent premium increases for consumers involved in an at-fault accident. The National Association of Insurance Commissioners (NAIC) offers the following information for consumers who are considering this option: |
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What is accident forgiveness? Accidents can mean expensive repair and liability costs, and lead to higher premiums. Accident forgiveness means that an insurer agrees not to increase a customer ’s premium after the driver is involved in an at-fault accident. It is an enticing perk that many insurance companies offer either as part of a standard policy to loyal customers or as an additional endorsement that drivers with a safe driving record can purchase. Some companies also use it as an incentive to new customers for switching from another insurer. Insurers will often even extend the option to parents of teenage drivers. While accident forgiveness can seem like a “free pass,” it’s important for consumers to understand the conditions and limitations associated with this option: 1. Is there a cost involved? In some cases, accident forgiveness is included as part of a standard car insurance policy; however, you will typically pay a higher premium for a policy that includes this added protection. More often, accident forgiveness is offered as an additional endorsement – or coverage option – for a fee. Costs vary by insurer, so check with your current insurer as well as a few others if you’re looking for the best deal. 2. Who is eligible? As with cost, eligibility may vary by insurer. Typically, qualification for accident forgiveness protection is based on two factors:
3. Are all accident forgiveness policies created equal? In a word, no. Policy conditions can vary greatly. Some policies require you to maintain a clean driving record for up to five years before you become eligible for accident forgiveness. With other policies, the coverage kicks in immediately. Similarly, some policies offer forgiveness for one accident while others forgive multiple accidents. 4. Does accident forgiveness make sense for you? After an accident, insurers can raise your premiums by as much as 40 percent. If you are a safe driver who pays standard rates, then depending on the cost, accident forgiveness might not make sense for you. But if you have a history of violations and accidents and already pay higher rates, then opting for the benefit might help you save money in the long run. Talk with your insurance company or agent to learn more about how your rates might be affected by an accident. More Information
December 2009 |
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About the NAIC Formed in 1871, the National Association of Insurance Commissioners
(NAIC) is a voluntary organization of the chief insurance regulatory
officials of the 50 states, the District of Columbia and five U.S.
territories. The NAIC has three offices: Executive Office, Washington,
D.C.; Central Office, Kansas City, Mo.; and Securities Valuation Office,
New York City. The NAIC serves the needs of consumers and the industry,
with an overriding objective of supporting state insurance regulators as
they protect consumers and maintain the financial stability of the
insurance marketplace. For more consumer information, visit insureUonline.org. |
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