Guide to Car Insurance Accident Forgiveness

Insuring your car can be a costly expense, especially if you’ve had an accident.

Some accidents are unavoidable, but with the right car insurance plan, you can avoid a post-incident hike in your policy amount, potentially saving thousands of dollars.

Allstate (Stock Quote: ALL) and some of its competitors will turn a blind eye to accidents. (For a fee, of course.) 

The company offers accident forgiveness as part of its Your Choice Auto Insurance product. Since January 2006, customers in nearly 60% of the country can ensure that their premiums stay exactly the same after an accident as they were prior to it. However, policy holders have had to pay an additional amount. The rate varies, but we’ve seen costs of $86 a year, on top of the annual insurance tab. 

The Wheel Deal
Wary drivers may line up to get no-risk protection for fender benders, rear-enders and crashes, but the offer isn’t open to everyone.

Those who qualify for Allstate’s standard plan will have to maintain a clean driving record for five years before they become eligible for accident forgiveness.

Policyholders who opt for the company’s top-line and mid-range insurance coverage will be eligible for accident forgiveness as soon as they sign on the dotted line, but there is still a significant difference between the two.

The mid-range policy is only good for one accident. After your second accident, you’ll have to pay a higher premium. The higher-end policy forgives multiple accidents, but that’s no excuse to treat your daily commute like a demolition derby. According to Allstate spokesperson Kate Hollcraft, even with the forgiveness option, multiple accidents could drive a customer’s premium higher.

The Costs and the Savings
Accident forgiveness doesn’t come cheap. The cost of coverage can differ depending on what state you live in, the car you drive and your driving record. But the savings can be real, too.

One Allstate client, who wanted to remain anonymous, tells MainStreet that an agent contacted her husband by phone to sell them the accident forgiveness deal.

Our source says she was told that she and her husband would be allowed one accident or one ticket without an increase on the policy if they agreed to pay an additional $43 fee twice a year. However, if she and her husband rejected the offer, and if they received a ticket for a violation or had an accident, then their policy could end up costing $1,490 per year, about double their current rate.

Other Insurance Options
The Your Choice Auto insurance plan is not the only accident forgiveness plan. Insurers such as Safeco and The Hartford (Stock Quote: HIG) have plans similar to Allstate’s, and Met Life’s (Stock Quote: MET) auto insurance unit has been offering its long-term customers accident forgiveness for no charge since 2003.

If you’re in the market for a new policy or switching to another carrier, here is a short list of insurers who offer accident forgiveness and their requirements:

Progressive Auto Insurance (Stock Quote: PGR)
Requirements: You must have had a Progressive auto insurance policy for four years and no accidents for three consecutive years.
Downside: Accident forgiveness only applies to the first accident after three years on a policy.

Geico (Stock Quote: BRK.A)
Requirements: You must be an accident-free Geico policy holder for no less than five years.
Downside: The company’s surcharge waiver is awarded provided that you have a clean record at the end of five years. There is a chance that you may not receive it.

Liberty Mutual
Requirements: A Liberty Mutual customer must maintain an accident-free record for five years. Additionally, the customer must not have received any driving violation in three years.
Downside: According to the company’s website, forgiveness coverage “is subject to the terms and conditions of Liberty Mutual’s underwriting guidelines.” These guidelines vary from state to state.

Nationwide (Stock Quote: NFS)
Requirements: You must be with Nationwide for five years and accident free for three years.
Downside: Accident forgiveness only applies to your first at-fault accident.