Accident Forgiveness- Will My Auto Insurance Premium Go Up?
Many drivers ask, "will my auto insurance premium go up after an at-fault accident?" The answer is yes, in most instances you will pay more for insurance if you are found to be at-fault in an accident. However, Massachusetts state law prohibits insurers from increasing your premium based on at-fault accidents or traffic violations that occurred more than five years prior to the effective date of your policy. The effect on your premium when you are at-fault in an accident will be based on the rules and rating factors your insurance company has filed with the Division of Insurance. Most insurance companies assign a fixed number of points for each type of at-fault accident or traffic violation, and the total point value is used to determine a percentage increase to the premium for the policy. At-fault accidents may affect future premiums for 3-5 years. The Massachusetts Division of Insurance reviews merit rating plans before authorizing an insurance company to apply them to determine premiums. Individual insurer’s rating plans are available to the public.
The points are assigned to the at-fault driver after an accident is closed. The insurance company must notify the at-fault driver with a surcharge notice within 30 days after the claim is closed. However, it is important to know several auto insurers "forgive" an at fault accident. The criteria varies on accident forgiveness from company to company. For most insurers offering this coverage, the driver must be squeaky clean prior to the incident. Some carriers charge an extra premium to have the optional accident forgiveness endorsement available to their insureds. Others impose restrictions related to loyalty. In these situations, you must have been insured with the company for a certain length of time and hold a good driving record.
If you do have an accident surcharge forgiven by your insurer, it's important to know that does nor mean the Massachusetts Registry of Motor Vehicles has forgiven the accident.The forgiveness only applies to the individual insurance carrier. If your agent markets your auto policy to other carriers, the at-fault points will be included in the pricing. You can see the accident forgiveness coverage can build loyalty to the current insurer by dismissing the first at-fault accident.
The accident forgiveness coverage is not available from all carriers. Those that do offer accident forgiveness may charge a premium. Several charge 4-6% of the annual premium so not all customers opt in for the coverage. It certainly is a nice safeguard when you are in the wrong place at the wrong time. However, if you pay 4-6% more each year for premium and do not have an accident then the cost benefit for the accident forgiveness coverage is not so great. Let’s say you pay $1000 a year in premium and pay $60 a year for the accident forgiveness coverage. Over five years, you will have paid $300 for the coverage. If you don’t have an accident then it’s easy to look back and say I shouldn’t have bought that coverage. However, if you do have a major accident. The coverage may save you more than $400 a year for five years. This surcharge amount varies by driver and coverage limits.
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