The companies that have an auto insurance accident forgiveness plan are also the top writers of personal passenger policies. They include, State Farm, Allstate, Progressive, Berkshire Hathaway, Nationwide, GEICO, The Hartford, and Liberty Mutual.
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Each of these major auto insurance companies has their own version of accident forgiveness. Sometimes, they market this program under a different name too. For example, Allstate has the Gold and Platinum protection plan.
According to an auto insurance study performed at Temple University, they include this level of coverage in their Your Choice Auto Insurance option. Progressive and Nationwide auto insurance companies use the same term, but their eligibility requirements differ slightly.
Some auto insurance companies like Berkshire Hathaway and their affiliate GEICO offer this level of protection, but not in all states. The majority of customers interested must inquire on their own. Their websites do not specify how the process works.
It is only when you contact them directly or during the application process that they explain the details and requirements. Long-term customers who meet the standards receive their information in their policy renewal documents. The remaining car insurance companies have their own advertising tactics.
While this level of coverage can certainly seem helpful, it is important to know what the procedures entail. The name can be deceiving. If you are not careful, you can misinterpret the plan and encounter problems in the future.
How Accident Forgiveness Works
According to the information provided by the Delaware Department of Insurance, the definition is very simple. However, the terms by which an insured receives the plan can be vague at best. There are very specific limits and conditions surrounding this kind of auto insurance program.
From a broad interpretation, the process works by allowing the policyholder forgiveness from increased premiums, especially when they cause the collision. Under normal circumstances, even a no-fault accident results in a slightly higher annual rate. At-fault accidents have a very negative impact because the points increase from a violation aspect. The higher the point value, the higher your rates.
However, in this case, you receive a pardon due to your selection. Depending on the terms of your policy, the free pass pertains to one or more accidents. This is just one way you benefit.
Your auto insurance provider may even extend this option to others on your policy. This means your spouse can also take advantage of the deal. This is a huge incentive for you if you have a great driving record. You maintain your low rate throughout the year and save a great deal of money.
The Eligibility Requirements
To qualify for accident forgiveness, you must deal directly with your auto insurance company. Since they all control their own plans, the variance is great.
For instance, if you select Allstate, you qualify automatically as soon as you join their Your Choice Auto plan.
Others, like GEICO and Berkshire Hathaway require their customers to have an accident-free record of five or more years. Liberty Mutual demands the same amount of time.
Progressive and Nationwide Auto Insurance Company both have the shortest time span.Their customers need only have a clean driving record of three years before they receive access to this option. Only State Farm has very high standards. Their customers must remain accident free for nine years if they want to participate in their Forgive the First Accident plan.
The good news is each of these companies offers this product to new applicants as well as long-term customers. They consider the entire driving history, not just the time they have with the company. That means if your driving abstract is clean and your previous auto insurance provider produces the right documentation, you qualify immediately.
The Costs Involved
The Office of Consumer Affairs and Business Regulation explains how the costs vary from provider to provider. It is difficult to ascertain the exact amount because some car insurance companies offer this free of charge, at least upfront. Others describe the accident forgiveness program as an optional coverage selection.
Allstate, for example requires current customers to upgrade to a specific plan. New customers must elect the coverage; it is not automatic in either case. This implies a charge of sorts. This means even when you qualify, they may charge you a specific amount on top of your annual premium.
That is why it is very important that you ask the right questions. You cannot assume that your reward will not come without a price tag attached. The reality is even if you do not receive an upfront cost, your premium rate can increase slightly due to the risk factor associated with this type of benefit.
This does not affect your savings because the difference between the costs to acquire the plan is lower than the rate increase from an accident.
Unfortunately, the car insurance companies need to increase their finances annually.When they excuse an accident due to this program, they still need to recover a certain amount from the loss. After all, they will continue to accept your damage claims.
If your vehicle requires repairs after the accident, they will still pay after your deductible. Nothing changes in this respect. To maintain the proper levels of balance within their finances, they must secure a certain amount of money from you.
One of the reasons why you should think carefully about this level of coverage is because of the extra costs.You receive protection and save money since your premium does not increase due to the accident, but think there is a price involved.
Your Driving Record is Still Affected
Your driving record remains untouched for a specific number of years. This means your protection with your car insurance company does not change the laws. Although they choose to excuse your accident, it remains on file with the state Motor Vehicle Commission and the United States Department of Transportation.
Effective, January 2004, every state agency forwards your documents to this federal government agency as a regulation from the Department of Homeland Security.
This presents a problem if you need to change car insurance companies. The process starts all over and they want to know about your history. They need this information to place you in a certain category along with other drivers. They match your driving record with those who have similar characteristics.
The rate they assess, while individualized, begins in a group setting. Any claims that your previous car insurance company paid are also public knowledge. They do not erase this information from the C.L.U.E report that every auto insurance company uses.
The Disadvantages of Accident Forgiveness Auto Insurance Plans
There are many advantages when your auto insurance company excuses an accident, especially for them. By offering this type of coverage, they retain more customers and add new ones effectively. It is a great way to attract anyone considering switching providers.
Unfortunately, the customer experiences certain disadvantages; some even consider these tactics unethical. For example, when you elect this policy addition, you are under a tight reign. The car insurance company decides how many accidents they forgive. They also dictate the type of accident. If you are involved in a collision that does not fall into a specific category, you may be in trouble.
In addition, your excused accident cannot save you from losing discounts. If you receive a safe driver discount, which most do when they qualify, you lose this reward as soon as an accident happens. Remember, they only promise that your premium will not increase because of the collision.
You also have to worry about surcharges. You encounter these costs when you have an accident. Surcharges are not part of the protection you receive when your car insurance carrier excuses your accident. Sometimes, surcharges can cost as much as $500.
Another drawback concerns where the blame lies. Most accidents are not cut and dry. At the very least, the assessment of your fault is a small percentage. This is certainly true when more than two cars collide. Each driver has a version of the situation. The police officer on the scene may write citations for all involved. This can affect your coverage.
Finally, and perhaps the most frightening fact is your own car insurance company may decide to cancel your policy.
If your car accident is severe and costly, they have no obligation to keep you as a customer.
This is especially true to the newer customers. One of the reasons they offer this level of coverage is as a marketing strategy.
However, things can change quickly. If your policy allows two accidents within a three-year period and you have both within a 12-month timeframe, they can simply choose to cut their losses. You are back to looking for a new car insurance provider.
Only You Can Determine if the Benefits Outweigh the Drawbacks
After reading all of the facts, the bottom line is very simple; only you can determine if the benefits outweigh the drawbacks. Having extra protection like accident forgiveness is a great way to feel secure while traveling on the busy streets and highways.
Some people will ultimately select this type of policy because of the peace of mind they receive. This is priceless. On the other hand, you need to review the specifics very carefully. Your car insurance company should not benefit from your choice more than you should.
If you have an excellent driving record, you should receive a reward for your diligence. It is very challenging to endure the hazards on the roads these days. If you decide to go for it, remember that you earned these privileges and make sure your car insurance company honors your contract. Do not agree to any of the terms until you understand everything they require from you.
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