Accident Forgiveness

Posted August 27, 2013 | Filed under topic Auto Insurance Buying Tips

The term ‘accident forgiveness’ is something that is pretty appealing to a lot of drivers and policy holders. However, as some experts within the industry point out, using the term ‘accident forgiveness’ is somewhat of a marketing ploy by insurance companies. Although the marketing around accident forgiveness policies makes them sound simple, a closer look into the insurance industry shows that there may be a lot of strings attached to one of these offers.

Here are some of the major elements of an accident forgiveness offer that auto insurance shoppers should look closely at.

Safe Driver Discounts

One of the very relevant issues around accident forgiveness policies is that they may not stop insurers from taking away a safe driver discount. The semantic sleight of hand here tends to confuse drivers who think that they will never be judged for an accident under an accident forgiveness policy. While insurers may contend that they didn’t “charge” for the accident, the loss of the safe driver discount will push the prices up. A Forbes magazine article describes this and other tricks of the trade in detail.

No-Fault Insurance Systems

Leaving aside the idea that many drivers don’t check whether accident forgiveness policies cover all accidents, or just accidents where they were at fault, it’s helpful to examine state no-fault systems and how they work.

Many states with no-fault auto insurance models now assign a percentage of fault to each driver involved in the accident. This can lead to a lot of questions about an accident forgiveness policy. Will the accident forgiveness feature apply to a certain portion of risk? Why did each driver get that fault percentage assigned to them? All of these questions too often come up after an accident, rather than getting analyzed when the auto issues shopper looks at a policy offer.

Delayed Costs

Other reports from the insurance industry have found that insurers may simply delay additional costs. A driver may look at a policy on renewal after an accident and not see raise rates. That doesn’t mean rates won’t go up, partially based on accident calculations, in future pay periods.

Dropping Policy Holders

Insurance companies often also have the inherent right to simply drop a driver or family of drivers whenever they feel the risk is not worth the reward. This is another loophole when it comes to providing accident forgiveness policies. Instead of raising rates, the insurance company can simply drop the policy if an accident is severe enough to warrant concern.

The Complexity of Auto Insurance Valuations

Another general issue about auto insurance also impacts accident forgiveness policies. The general idea is that there are so many factors in policy underwriting that it’s usually possible for an insurance company to simply “bait and switch,” to point to other factors as drivers of rising costs in order to fend off questions about unfair or improper rate raises. Without the salient information in front of them, drivers are usually powerless to challenge these kinds of changes.

Think about all of these caveats when discussing an auto accident forgiveness feature with a car insurance company. A little research could help to prevent some unpleasant surprises if you ever do get in a fender-bender later on down the road.