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auto insurance

It’s all over the airways, commercials convincing you that while most insurance companies raise your rates after an accident, “we wouldn’t do that to you.  It’s terrible, it’s evil, how could they?”.

It WOULD be great if insurance companies didn’t raise your rates.  But they do.  So how can these companies proclaim to be the nice guys?

Well, in their defense, you can purchase an option on their insurance policy for “accident forgiveness” or the like.  The key word here is PURCHASE.

If you dig into the policy, you’ll find a charge of around $75 per year for the accident forgiveness perk.  In addition, most of these options only forgive one accident in a 3 year period.

So how much would an accident cost if you didn’t have a forgiveness option?  Well, it varies widely depending on all kinds of factors but 1 accident with no other nicks on your record is likely to cost you about $250-300 over 3 years.

So who wins?  Well, if you have an accident every 4-6 years you break even.  If you’re like most and experience accidents less often than that, guess what, the insurance company actually makes money off of your “accident forgiveness”.

In the end, Accident Forgiveness may provide a sense of security that you appreciate.  But don’t let insurance companies make you feel like they’re doing you a favor. They’re doing what they do, making intelligent business decisions and catering advertising to your emotions.