How Accident Forgiveness Endorsements Work


Car accident

If you have auto insurance, you have most likely been pitched the accident forgiveness endorsement at some point by your insurance professional. Sometimes insurance companies like to give this endorsement a fancy name such as “responsible driver guarantee” or “driving record protector”, but no matter what they call the endorsement at the end of the day, they all achieve the same purpose. If you have ever wondered how the accident forgiveness coverage works or if there is a point of having the coverage, you’re in luck as in this article we outline what the coverage is, how it can you help you, and how it could become a problem.

What is Accident Forgiveness?

Accident forgiveness coverage is an endorsement that can usually be purchased for each driver on your policy that qualifies (accident free for a certain amount of years). The coverage will protect your driver rating and claims free discount in the event of your first at-fault accident on the policy since purchasing the endorsement, or since the endorsement has become available again since your last forgiven accident.

How does the Coverage Protect Me?

Normally after an at-fault accident or claim, your insurance company will drop down your driving rating due to the claim. Not only will your driver rating be lowered (higher premium), but you will most likely also lose a claims free discount that was being applied to your policy or driver.

If you have purchased the accident forgiveness endorsement, it will ensure that your driver rating and claims free discount do not get lowered or removed due to your first at-fault accident since the endorsement has become active.

In more simple terms, this means that your premium will not go up as a result of your first at-fault claim after the endorsement has become activated.

Are There Any Catches?

Yes, there are some minor things to be aware of when it comes to accident forgiveness coverage.

Moving to Another Insurance Company

One of the biggest issues that brokers run into with the accident forgiveness endorsement is that if someone has an accident that has been forgiven in the last 6 years, it is hard to move that customer to another insurance company.

The reason it is harder to move that customer to another insurance company is that the accident forgiveness is only provided by the insurance company you purchased it from. If you try to move insurance companies within 6 years of the forgiven accident, the new insurance company will rate your policy as though you’ve had a chargeable claim in the last 6 years. This will make most insurance companies prices higher than your current insurance company if you have a forgiven accident in the last 6 years.

This can create problems if you have home and auto with the same insurance company. If your premium on your home gets raised a large amount (>$200), it may not be cheaper to try to move your insurance policies to another insurance company due to a forgiven accident. That does not mean that the endorsement shouldn’t be used, but you should be aware that this situation could happen.

Convictions / Tickets

If the driver of the insured vehicle has been convicted of a major or serious offence or an offence under the Criminal Code of Canada as a part of the accident, most insurance companies will not apply the accident forgiveness. This makes sense on their part as if you are out on the road trying to get in an accident, drinking and driving, or racing your vehicle, that is not what your insurance policy was intended for and it is not what you agreed to when you purchased the insurance. You should know the exclusions on your policy and if you are not aware of them, you should call your broker to find out.

Statutory Conditions

As stated above, if you are doing things that are not permitted by your auto insurance policy or any other prohibited activity that is listed in the statutory conditions of your insurance policy, the insurance company will not apply the accident forgiveness. In reality, they most likely will just cancel your insurance policy as you have breached the conditions of the contract/policy.

Is the Endorsement Worth the Money?

That is a question that many people ask when they consider the endorsement when it is offered by their insurance broker. With the endorsement cost being different with every insurance company and the cost ranging from $65-$95 per driver per year, it is more than a reasonable question.

When considering this endorsement a little math might needed. A claims free discount could be as much as 10% depending on the years you have been claim free and the insurance company you are with. If you then consider the fact that your driver rating will be lowered and you will have to earn back the higher driver rating for the next few years, it may be a quick math session.

The endorsement most certainly pays for itself if you have an at-fault claim.