The accident forgiveness endorsement is a relatively new rider available with some auto insurance companies. It’s not available in every state and may not be available for all drivers.
You can add this rider to your standard auto policy. Or it might be built into a standard policy depending on your insurer. Either way, it’s a handy perk for new drivers, teenage drivers and historically safe drivers. So today, we’ll take a close look at accident forgiveness on auto insurance and explain everything you need to know.
What is an Accident Forgiveness Endorsement on Auto Insurance?
Accident forgiveness is usually considered an “endorsement” on your auto policy. In other words, it’s an additional perk you can buy for additional money. Endorsements are also known as “riders,” and we’ve written more about them. Sometimes, accident forgiveness is included in a standard auto policy.
How Accident Forgiveness Works
Accident forgiveness allows a safe driver to have a single accident claim without a change in premium. It’s usually only available to drivers with squeaky-clean driving records.
Without an accident forgiveness rider, you’ll probably see an increase in insurance prices after a claim. This increase varies on many factors, such as your overall driving record and the total amount of a claim. Without an accident forgiveness rider, the premium increase after an at-fault accident could last for several years and might end up costing you thousands of dollars in the long run.
We can see how this coverage would bring peace of mind to:
- Parents of teenage drivers
- Young drivers looking to keep their rates affordable in the future
- And mature drivers with an excellent driving history
For them, accident forgiveness is a nice perk to have. But it’s not available to everyone and is not legal in some states. Some insurance agents even consider it a marketing trick, and we’ll talk about that in a moment.
There is No Accident Forgiveness in California
California is the most populous state in the US, by far. It’s also home to more than 27 million licensed drivers. According to ABC News, there are roughly two million more Californians driving without a license. To put that in perspective, that’s nearly triple the entire population of Ohio.
You’ve undoubtedly heard about smog and traffic problems in some California cities. Unlicensed and uninsured drivers are problematic there too. Thousands of car accidents occur there every day, and many times they involve undocumented individuals who have no license, no insurance, no identification and no home.
CA Proposition 103
Back in the 1980s, insurance companies paid for repairs after these accidents and passed those costs down to insurance customers. But safe-driving consumers felt their ever-increasing premiums to be unfair.
So consumers banded together and voters passed California Proposition 103 in 1988. Ultimately, any auto insurer that wanted to do business in California must offer a 20% discount to “good drivers.” The “good driver” definition is straightforward: no DUIs, no at-fault accidents, no serious claims, and so on.
- In reality, a “safe driver” insurance premium in California stayed about the same.
- But any at-fault accident immediately pushes a driver into a risk group that charges 20% more.
- They call it “losing your safe driver discount.”
- But it’s not a discount. It’s a risk group rating.
What does all this have to do with an accident forgiveness rider? Well, in California, these endorsements are not legal. Once you have an at-fault accident that does more than $500 damage, a DUI conviction, or even too many speeding tickets, you must be grouped with high-risk individuals. It’s the law. So accident forgiveness endorsements are not available there.
Insurers cannot advertise their accident forgiveness options in California. In 2014, Boston-based Liberty Mutual had to pay Californians $925,000 after an ad campaign pushing their accident forgiveness policy perks.
Now that you know why accident forgiveness isn’t available in “the Golden State,” let’s talk about the insurers known to offer accident forgiveness in other states.
Which Insurers Offer Accident Forgiveness Endorsements?
According to this list we found at Experian, these insurance companies are known to offer accident forgiveness riders:
- American Family
- The Hartford
- Liberty Mutual
They’re a good starting point for drivers looking for this particular endorsement.
Earlier in this piece, we mentioned that some agents consider accident forgiveness to be a dirty marketing trick. Let’s finish our study of accident forgiveness riders by exploring that idea.
The Ethics of Accident Forgiveness: Is it a Slimy Insurance Marketing Trick?
Maybe they are. Taken at face value, accident forgiveness riders seem fair. Safe drivers can choose to pay a little extra now and rest easy knowing their insurance rates won’t skyrocket after a fender-bender. It’s exceedingly fair as an opt-in rider, an additional perk that someone knowingly chooses after performing research.
However, accident forgiveness as a built-in coverage on an insurer’s standard auto policy isn’t as fair.
If an auto insurer were to include accident forgiveness on every good driver policy, they’d be forcing all good drivers to pay a little extra now for claims that will probably never happen.
In that sense, it’s a way for insurers to increase the premiums on drivers they know to be safe. These are the customers that should be paying the least for their policy!
And, just because a driver has a clean record doesn’t mean they are a safe driver. Maybe they’ve been lucky and escaped catastrophe so far. But should any driver have the privilege of escaping increased premiums after a severe wreck? Insurance premiums aren’t meant to be punitive, but rising prices might help to rein in a wayward youngster after their first auto accident.
Ultimately, insurers want to do business with the safest drivers. And those drivers should always have the best rates.