Vehicle accidents are one of the main causes of premium increases at renewal. Companies start considering you as risky driver even you had only one accident in the last five years. As a result they will start recalculating the premium and taking away the savings they offered previously. Furthermore, the same incident will affect the policyholders when they are looking for alternative coverage.
Solution offered by Accident Forgiveness
The idea behind the accident forgiveness is quite novel in the sense that you get something back for being a loyal customer. You do not even get considered for the accident forgiveness programs if you are not with the company long enough. With quite a few companies that is at least five years. Moreover, you need to have a clean record all this time.
Once you qualify and pay the agreed premium the company promises to ignore the next claim you made that you were at fault. The word is ignore (not forget) as the accident goes into your record. You cannot any more be called a safe driver. But company agrees not to punish you with high premiums for one mistake. In most cases, it would not be extended to second accident you suffered and you may start paying higher premiums there onwards.
For such good policyholders accident forgiveness should be offered free of charge. However, studies show that companies charge stiff additional premiums for this privilege.
Is accident forgiveness is a privilege or a catch?
At a close look it may not really be a privilege but a catch to charge extra premium just when you were paying really low rates. Plus, it may be a catch to stop you going anywhere after you had an accident. Since the accident goes onto your records you cannot claim discounts for no claims when you want to leave. And the accident records stay effective for at least three years. Essentially, you are stuck with the company for another three years unless you find really considerate and competitive insurer elsewhere.
Considering that you paid good money to put yourself in that position is not really a something to be proud of. The fact of the matter is that you have probably wasted a good history on a company that will shoot up your rates as soon as they have a reason. The availability of accident forgiveness does not make it okay. Good customers should have a forgiving insurer when you have a crash one in a blue moon.
In other words, by all means it is great if you can add it on your policy at a reasonable cost or even free. Otherwise, you should think twice before agreeing to pay a lot extra.
Should your car insurance rates really shoot up after one accident in five years?
This is a big question and many experts believe that the answer should be no. It is inevitable that you will see premium rises but this should not be a scary amount by any account. Years of no claims history should mean something to a company you have been loyally supporting with regular premium payments so far.