What is Accident Forgiveness on an Auto Insurance Policy?


You’ve probably seen the insurance company ads on TV. “We won’t raise your rates after an accident”. Insurance companies call that “accident forgiveness”. And it’s REALLY important for drivers who rarely have accidents.

What Is Accident Forgiveness?

Auto insurance companies raise your rates for 3 – 5 years after an accident. Some insurers waive the extra charge if it’s your first accident with them, and you’ve insured with them for 3 or 5 years. Some only waive the rate hike if your driving record is squeaky clean. This rewards good drivers who have one bad moment. It’s also intended to encourage your loyalty to the insurance company.

How Much Does An Accident Raise My Auto Insurance Rates?

An auto insurance accident surcharge is a factor, not a flat dollar amount. Each insurance company decides how much and how long to surcharge. So, the cost varies by company and by client. We’ve seen increases from $100 to $600. The average is about $225 per year for 3 to 5 years.

Do I Lose Accident Forgiveness if I Switch Insurance Companies?

Yes, but you might be able to buy it back. Our South Portland Maine insurance agency represents 9 major auto insurance companies. Of those:

  • TWO allow you to “earn” Accident Forgiveness by not having claims. They don’t charge more for that benefit, but it takes 3 – 5 years to qualify.
  • FOUR sell optional Accident Forgiveness to new customers. That waives your first accident even if you’ve only been insured by that company a short time.
  • THREE don’t even offer Accident Forgiveness; they raise your rates after an at-fault accident.

How Much Does Accident Forgiveness Cost?

Of the four insurers we represent that sell Accident Forgiveness, only one sells it a la carte. The other 3 include it in a bundle of optional coverage. Either way, it costs between $80 and $120 per year to add Accident Forgiveness to a multi-vehicle policy. That’s about half of the $225 average rate hike after an accident.

The Secret That Makes Accident Forgiveness So Valuable

Many people don’t know this: most Maine auto insurance companies surcharge for not-at-fault accidents in addition to at-fault ones. This is a recent development, and it baffles people.

Why does the insurance company raise your rates when it wasn’t your fault? Insurers have convinced the Maine Bureau of Insurance that folks who’ve had any accidents – even not at fault – are more likely to have another. We can’t defend the data, and we don’t make the rules. But we can advise you how to play the game.

Related Post: Can My Insurance Company Charge Me for a Not-at-Fault Accident? 

The “not-at-fault” accident charge can be almost the same as an at-fault accident. We’ve seen increases from $125 to $300. The average is about $225.

Accident Forgiveness, is a “get-out-of-jail-free” card that allows you to avoid the rate hike. That makes Accident Forgiveness even more valuable. Interesting side note: the insurance companies that don’t offer Accident Forgiveness are the same ones that don’t charge for not-at-fault accidents. They also tend to have smaller rate hikes after an at-fault accident. All are smaller, regional insurance companies.

If you live in Southern Maine and have questions about your auto insurance, call Noyes Hall & Allen at 207-799-5541 or click the chat button below. We’re independent and committed to you.