Think Twice Before Paying for Accident Forgiveness

If you pay extra for accident forgiveness with your car insurance, you might think your premium won't go up if you cause a crash. But don’t bet on it — it’s not quite that simple.

With accident forgiveness, insurers say they won’t raise your rate solely due to an at-fault accident claim. Some offer it as a free loyalty perk for long-term customers with clean records, while others make it an optional add-on you can purchase to put your mind at ease. In either case, a clean driving record for three to five years is required, so only those who tend not to cause accidents are eligible to pay for the perk.

And that’s the crux of it — how much do you want to pay for a mistake you haven’t made, and might never make? Here’s how to weigh whether it’s worth the extra cost.

Premium increases vs. the cost of forgiveness

First, it helps to know what’s at stake if you don’t have accident forgiveness and you cause a crash.

A January 2024 NerdWallet analysis determined how much more drivers with one at-fault crash on their records pay compared with accident-free drivers. Rates and surcharges vary widely among insurers, but, on average, the difference in premiums was $954 per year, or a 48% increase in full coverage insurance after causing a crash.

The additional charges stick around for three to five years, depending on the company, so forgiveness can be appealing.

» MORE: How much car insurance rates go up after an accident

But how much does it cost? Among carriers that charge for accident forgiveness, it often costs drivers an additional 2% to 9%, though it varies significantly by state and insurer. That may not seem like much, but if you drive for several years without an accident, it can add up.

And say you did cause a wreck; you wouldn’t necessarily avoid a premium hike. Any good driver or claim-free discounts, which tend to range from 10% to 40%, could go out the window.

What’s more, car insurance rates are trending up overall, so many drivers are seeing premium increases without any dings on their records. Between September 2017 and September 2018, car insurance costs rose 6.6%, according to the Bureau of Labor Statistics.

Forgiveness is rarely free

If you want accident forgiveness on your auto policy, you’ll have to pay for it. Some insurers automatically include this coverage and your premiums are automatically higher because of it. You can also get accident forgiveness as an optional add-on coverage for an extra monthly fee.

For drivers in California, accident forgiveness isn’t an option. Proposition 103, which passed in the state in 1988, outlaws “excessive” insurance rates and accident forgiveness was deemed excessive as you’re essentially paying for coverage on an accident that hasn’t happened yet.

Get what you want for the best rate

Insurance rates are determined by many factors, and driving behavior is just one — but it’s one you control the most. Drivers with squeaky-clean records get some of the lowest rates, so shoot for those good-driver discounts.

It’s a good idea to revisit your policy and shop for insurance quotes every one or two years. And if you’ve caused an accident, remember to compare auto insurance rates just after the third and fifth anniversaries of your crash to keep premiums down. Check with your agent or a recent policy statement to see:

• What discounts you currently get.

• Whether you have accident forgiveness.

• How much extra it costs if you pay for accident forgiveness.

To determine whether you want accident forgiveness in a new policy, get quotes with and without it and compare with what you’re paying now. An insurance agent can be especially helpful here since not all online vendors show rates with and without accident forgiveness, which can be frustrating to discover after entering all your information.