Great question! In today’s world not enough people really sit down to evaluate what they have or do not have on their insurance policy. If you’re with a broker like McDougall Insurance & Financial you can bet we are going to talk to you about claims forgiveness.
So what is claims forgiveness?
First of all it is not always called claims forgiveness. Some companies call it accident forgiveness, claims protection and maybe even something else. But the important thing to note is that it essentially means and does the same thing for you regardless of the company issuing it. Claims forgiveness is a feature, typically for auto insurance policies only, that protects your driver rating from being impacted when you have an at-fault accident or claim.
What does that do for me?
Well you see your driving record impacts how much premium you pay for you insurance premium each year. When you get into an accident your driver rating decreases, and depending on the company it can decrease drastically. With most companies the maximum star rating you can achieve is either a 9 or 10 star rating. If you have this rating it means you have been driving at least 9 years without a conviction or claim. However, if you get into an accident you will lose that star rating and guess what? The lower the star rating the more money out of your pocket for your insurance come your next renewal. So what does the accident forgiveness do for you? It provides you that protection in the event you are at fault for an accident and will maintain your rating come your next renewal. That means no premium increase!
What if I get in two accidents with the accident forgiveness coverage?
We don’t often see this happen, but in the rare event that it does you will be facing a difficult renewal. The accident forgiveness only covers you for one at-fault accident. If that number is exceeded then the endorsement no longer applies. This would mean that come your next renewal the company would either drastically increase the premium or you would no longer qualify for their market and would have to go to a high risk market (they are expensive).
Does it affect me if I am not at-fault in an accident?
If you are not at-fault for the accident your rating will not change and you will still have the claims forgiveness coverage. It only applies for at-fault claims.
How do I get claims forgiveness coverage?
Every company has different rules surrounding the coverage but as a general rule of thumb you need to fall into these eligibility requirements:
- Been licensed for 6 years or more (some companies require you to be 25 or older)
- Been accident free for the last 6 years (some companies require 10 years accident free)
- Vehicle cannot be rebranded, modified or rebuilt
How much does claims forgiveness coverage cost?
The cost varies from companies to company and person to person but it is typically quite inexpensive. Between us, most insurance companies use it as a retention tactic. If they offer it to you they are confident you are a good driver and know that you will likely stay with them for a long period of time. But keep that between us! And to get back to your question it typically only costs $25-$60 for the entire year, which is less than $5/month at the high end.
Ask your broker about claims forgiveness today and remember when you are getting a quote on your auto insurance to always do your best to compare apples-to-apples and know what insurance coverage you are receiving.