There are a lot of buzz words in the personal insurance industry. Combine that with billions of dollars in advertising spent by the largest insurance companies, and all of those words just run together, often leaving consumers in the dark with what all this means and how it actually works. Today I will clarify “Accident Forgiveness” for you, so that you have a better understanding of how it works, when it’s applicable, and whether this is a valuable option for your insurance policy.

First, there’s no ‘standard’ when it comes to what is provided on a personal auto insurance policy. Insurance companies determine what packages and perks to offer based on many things, including how they file with the state they are providing insurance in, what is available to different types of insurance history, and what impact these packages and perks will have on the insurance company directly as well as their policy holders.

Now that we’ve got that out of the way, let’s talk about what Accident Forgiveness actually is. Accident Forgiveness on a personal auto insurance policy means that your insurance policy will not be surcharged for one accident that happens within a specified period of time, usually 36 months. What this means is that if you were to have an accident while you have accident forgiveness, your insurance policy cost will not experience the same rate increase as it would have without having this option. But that doesn’t mean your insurance policy cost won’t increase due to an accident, but more so that it won’t increase as steeply. Often times, even with accident forgiveness, you’ll still lose a ‘claim free discount’ or other preferred rating, so the pricing can still increase, but it would be less of an increase than you would experience without the feature. Since accidents can impact your insurance policy cost for three years and your shopping ability for five years, it’s important to weigh out the cost benefits both in purchasing accident forgiveness and also the potential pricing changes if you have an accident in the future.

The next important thing to know about accident forgiveness is that it only applies to your current insurance policy. Even if you have accident forgiveness on your current insurance, that doesn’t mean that you’ll maintain that immediately when you move to a new insurance provider. While some companies offer immediate accident forgiveness, others take up to three years to earn this benefit. Plus, most importantly, if you had an accident that was ‘forgiven’ on your current policy, this feature is always for future accidents, not ones that happen in the past, so your new policy cost would be based on having that accident in your insurance history.

In order to determine whether accident forgiveness is a feature that is beneficial for you, weigh the costs of the policy with and without this feature as well as your likelihood of having an accident. Accident forgiveness gives you no financial benefit if you don’t have an accident, but can save significantly if you do have an accident. Again, with policies being different with different companies, it’s important to have a conversation with the insurance professional that is providing you the insurance policy or proposal to gather all of the details and conditions. i.e. Insurance is happy to offer consultation and reviews of your current and potential future insurance policies.

Tiffany Nolan is the owner of i.e. Insurance, an insurance broker located in Western PA. Tiffany and her team provide personal and business insurance for clients in Pennsylvania and Ohio, with a focus on helping clients understand the protection available to them. By offering an educational approach to insurance and the ability to compare multiple highly rated insurance companies, clients receive personalized service and customized policies to balance their exact needs and budget. Learn more about i.e. Insurance by visiting their website at www.ieinsurancepa.com, or give them a call at 724-719-2093.