Collision Forgiveness Options Auto Insurance Companies Offer

Today, many collision auto insurance policies that are offered by automobile insurance companies include something known as collision of forgiveness (or accident forgiveness as it sometimes is referred to) as an incentive to attract new customers. This type of offering is the result of many drivers’ fear of the financial consequences associated with many automobile accidents. In particular, many drivers are leery of the increased insurance premiums that can follow automobile accidents.

Collision Forgiveness

When you're involved in an at fault accident, collision forgiveness acts to protect you from premium increases resulting from a damaged driving record. For instance, most insurers use some sort of rating system to determine how likely a driver is to have an accident; if your insurance company driver rating goes down, you will normally be required to pay higher premium rates. However, with collision forgiveness protection, you will usually not be required to pay higher premiums because of a reduced driver rating.

The availability of collision forgiveness will vary by company. If the company makes the feature available, in may be a built-in feature of the auto insurance policy, or it may be purchased as an additional endorsement to the policy.

Collision Forgiveness Built Into Policies

Some policies may include collision forgiveness in the policy terms. Policies that do include collision forgiveness are generally sold at a higher rate than standard automobile insurance policies. While amounts charged for collision forgiveness vary, typical rates are in the 10 to 20 percent range - above the cost of standard comprehensive and collision automobile insurance.

Collision Forgiveness Purchased as an Endorsement

If your automobile insurance policy does not include collision forgiveness protection, your insurance company may offer the coverage as an endorsement to your current policy. Even if your insurance company does not have the coverage available, there are companies that sell collision forgiveness packages as a secondary type of insurance.

How Collision Forgiveness Works

If you have collision forgiveness protection, and you are involved in at-fault accident, then collision forgiveness protection is usually extended in one of two ways:

•Total forgiveness - the insurance company agrees that there will be no increase in your auto insurance premium at all;

•Partial forgiveness - the insurance company will slightly raise your insurance premium - but not as much as it would without collision forgiveness protection.

While collision forgiveness may reduce, or eliminate, any actual premium increases, you may still lose any accumulated discounts that you have earned with your past safe driving record. Therefore, losing the accumulated safe driving discounts may serve to increase your premiums as well.

Forgiven But Not Forgotten

While the insurance company may not increase your insurance premiums (because of the collision forgiveness policy), the accident will still be part of your driving record. Moreover, the insurance company may consider your driving record in the future when determining whether or not to renew your policy. While collision forgiveness may save you money in the short-term, having an at-fault accident will usually cause higher insurance rates – sooner or later.
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