First Accident Forgiveness - What You Need to Know About Your Car Insurance

Several large car insurance companies are now offering first accident forgiveness to their customers. This usually means that they will not raise your car insurance rates after your first at-fault accident. It may seem like a great deal, but make sure that you read all the fine print before signing up. First, is this an additional service that is added on to your current policy, or is it part of your standard policy? If it's an add-on that comes with a higher price, will it really pay for itself?

How Much Will You Pay After an Accident?

The standard policy that most car insurance companies follow is to raise your rates by 40 percent of their base rate when you get into an accident. This means that if their base rate is $500, your car insurance rates would be raised by $200. A staggering increase to be sure, however not all companies play by this rule. Some will raise your rate by 40 percent of your current rate! For someone who is already paying high insurance due to any number of factors, this type of increase can break the bank. No matter how your car insurance company calculates it, in almost every case, your rates will go up after an accident.

When you consider this, first accident forgiveness seems like a great deal, especially if you are paying higher car insurance rates than some of your friends. Ask your car insurance company if this service is available, and if so do you have to pay for it. Calculate the yearly additional cost, and compare it to your worst-case scenario insurance hike. If you currently pay $1000 per year, and your insurance company's base rate is $600, your insurance is likely to go up by between $240 and $400 after an accident. Ask yourself, are you a reckless driver? Do you keep your hands at ten and two, or do you chat on your cell phone and change CDs like a DJ? Whether or not it's worth the cost is a very individual decision.

Don't Forget the Fine Print

Before you decide to add first accident forgiveness, make sure that there aren't any hidden hoops that you need to jump through. Some companies require that you stay accident-free for three years before your forgiveness starts. If you've been with the same company for over three years and never had an accident, then you might be able to begin your new coverage right away. However, if you've just switched to a new company, three years can be a long time to wait for that coverage, especially if you have to pay for it in the meantime!

Whether you're a street racer or a soccer mom, the intricacies of your car insurance policy can seem like a mind-numbing subject. The good news is that with sites like carinsurancerates.com, you can comparison shop for the best car insurance rates and policies for you. If you're looking to add additional coverage, like first accident forgiveness, or just save a little money, shop around and find the best fit for you.