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Is Accident Forgiveness Insurance Worth the Cost?

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In the event of a car accident, an increase in your auto insurance premium is only another thing to add to your list of worries. Having accident forgiveness insurance, however, can take this worry off your plate entirely. 

What is accident forgiveness insurance?

Accident forgiveness insurance, also known as accident protection or accident waiver, is an add-on to your auto insurance policy. As an extra layer of protection, it prevents your auto insurance company from increasing your insurance premium due to your first at-fault accident. 

Under Ontario car insurance, accident forgiveness insurance is referred to as the OPCF39 policy (Ontario Policy Change Form). Auto insurance companies in Alberta and parts of Atlantic Canada, however, refer to the endorsement as the SEF39 policy (Standard Endorsement Form). 

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Who qualifies for accident forgiveness insurance?

Not everyone can add accident forgiveness insurance to their auto insurance policy because insurers want to limit their risks. Therefore they only offer this auto insurance endorsement to only the safest drivers. Insurers look for several requirements, with a clean driving record being the most important factor. 

Typically, insurance companies will check your driving record to ensure you haven’t had any at-fault or partially at-fault accidents within at least the last 6 years. Of course, you also need an active auto insurance policy with your insurer and a driver’s license to qualify for the add-on of accident forgiveness insurance. 

What are the limitations of accident forgiveness insurance?

Although accident forgiveness insurance provides great benefits in preventing your auto insurance premium from increasing, there are also several limitations to the policy. 

Accident forgiveness insurance does not cover:

  • Demerit points
  • Speeding tickets
  • Ontario Highway Traffic Act violations
  • Criminal convictions
  • Accidents after the first one

Additionally, most policies won’t cover commercial use vehicles, so if you’re driving your car for Uber and get into an at-fault collision, accident forgiveness insurance can’t be used to protect you. 

Also, most auto insurance companies will only provide accident forgiveness insurance to the primary driver of the vehicle, limiting your protection if several people drive your car. However, each insurance company offers different rules to accident forgiveness insurance, so make sure you discuss your policy with your insurance broker to understand all the limitations. 

Lastly, accident forgiveness insurance only forgives your first at-fault accident, instead of erasing the accident completely from your driving record. So if you decide to switch auto insurance companies, your new insurer could potentially see the accident on your record and raise your premium accordingly. 

How much does accident forgiveness insurance cost?

Accident forgiveness insurance generally costs between $65 to $95 annually, depending on your auto insurance plan. Some insurance brokers may offer it at a discount or for free to long-standing customers, so be sure to ask your insurer for an exact price. 

How long does accident forgiveness insurance last?

Accident forgiveness insurance is usually purchased on an annual basis for a term of coverage lasting one year. If you use up this coverage because you get into an at-fault accident, you typically need another 6 years of accident-free driving to qualify for the add-on again (every auto insurance company has different rules, though). Remember, switching auto insurance companies after an accident to dodge the 6-year term doesn’t necessarily work either as any auto insurance company can view your previous accidents, despite having the coverage.

That said, always compare car insurance quotes because sometimes, even with the accident not forgiven, your car insurance rate may be cheaper elsewhere. 

Is accident forgiveness insurance worth it?

It depends. Accident forgiveness insurance might be worth it if you are generally a good driver. The add-on can protect you from facing a large penalty for one small, uncharacteristic mistake. However, you would still need to purchase collision insurance or comprehensive insurance to cover the cost of any replacements or repairs to your vehicle.  

The Ontario Insurance Act also prevents auto insurance companies from raising their premiums due to minor collisions resulting in damages under $2,000 per vehicle and no injuries. This is limited to once every three years, but if you haven’t committed any major at-fault accidents and stayed within the limit of minor accidents, your insurance company cannot raise your premium due to an accident claim, regardless of whether you have accident forgiveness insurance or not. 

On the other hand, you might not get into an accident at all, so it is ultimately up to whether or not you want the added protection, just in case. If you feel that paying the annual amount for coverage outweighs the cost of a potential premium increase due to an accident, then go for it. 

How much does your insurance go up after one accident?

According to one study, your insurance can go up by as much as 34% following a collision involving bodily injury or serious property damage. If you’re currently paying $150 per month, your rate could jump another $600 per year for at least 3 years until it starts coming back down. At about $80 per year, it’s a cost that could lead to big savings. 

The bottom line

Although there are limitations to accident forgiveness insurance, it is a good option to have in your back pocket if you want the extra protection. However, not everyone qualifies for accident forgiveness insurance, and you might not even want it depending on your level of risk tolerance. 

If you’re interested in adding accident forgiveness insurance to your auto insurance policy, speak to your insurance broker for more details on the added coverage. 

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