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While cars are necessary for many people, not to mention a large part of our economy, there’s no denying the devastation they can cause when accidents occur. In fact, there are hundreds of thousands of collisions between drivers, motorcyclists, cyclists and pedestrians every year in Canada, many of which result in serious injury or death.

Thankfully, Transport Canada’s National Collision Database (NCDB) shows that car accidents leading to injury or death have been on a steady decline over the past couple of decades. For instance, while fatalities per 100,000 residents increased slightly from 1,694 to 1,743 (0.2%) in 2017 – 2018, this is still the second lowest number on record and is a significant step down from the 2,632 fatal accidents there were back in 1999.                

Nevertheless, given the sheer number of collisions that happen annually countrywide, having auto insurance is extremely important, no matter how often you drive. Accident forgiveness insurance can also be a worthwhile investment when buying your policy.

What Is Accident Forgiveness Insurance?

Accident forgiveness is an optional add-on that you can pay extra for when you purchase auto insurance. Basically, it stops your insurance premium from going up following an accident that you were held responsible for. Every province, territory and insurer offers different rates, terms and restrictions for accident forgiveness insurance.

Otherwise known as “accident protection” or “accident waiver”, this type of add-on provides you with additional financial protection following your first at-fault car accident. Accident forgiveness is an insurance company’s way of addressing that some drivers have unexpected incidents, even if they’re normally responsible behind the wheel. So, if you have the add-on in place and get into an resolvable at-fault collision, your accident forgiveness insurance will stop your premium from increasing once your claim is filed.    

How Can Accident Forgiveness Insurance Help You?

Although rates and conditions can vary depending on where you acquire your auto insurance policy, there are a few general things to keep in mind when it comes to accident forgiveness insurance in Canada, including but not limited to: 

  • Accident Protection Is Optional – Remember, accident forgiveness insurance is an extra service that your insurer can add to your car insurance package upon request. It’s not usually a standard perk and will raise the cost of your monthly premium, so make sure to read your policy carefully before you buy it.
  • You Have To Qualify For It – When you apply for accident forgiveness insurance, your potential provider will check your driver’s record. The cleaner your record is and the longer it’s been since your last accident, the easier it will be to qualify for a good plan, whereas drivers with terrible histories may not be eligible at all.
  • Not All Incidents Are Covered – Accident forgiveness insurance will only protect your premium after your first reasonable at-fault collision. It normally doesn’t cover incidents that fall under provincial or territorial traffic laws, such as reckless driving or more serious convictions (criminal negligence, speeding, etc.).
  • Only Available For Personal Use – Most auto insurance providers and brokerages don’t offer accident forgiveness to commercial businesses, like Uber. These places generally have their own special policies to protect drivers and vehicles. Accident forgiveness insurance is reserved for personal policies.

Check out our complete guide to car insurance discounts to see which you may qualify for.

What Doesn’t Accident Forgiveness Insurance Cover?

There are specific vehicle-related incidents that accident forgiveness insurance policies can and can’t cover. Limitations are set by the insurer and probably won’t include:

  • Demerit points
  • At-fault accidents following the first  
  • Minor traffic violations (speeding tickets, tailgating etc.)
  • Major traffic violations (distracted driving, falsified license, etc.)
  • Criminal charges (negligence, drunk driving, etc.)

As mentioned, most accident forgiveness insurance policies also can’t cover incidents that occur with commercial vehicles, such as cars used by Uber drivers. Additionally, only the primary driver is covered. That means if you borrow someone’s car and get into an at-fault accident, their premium could go up, even though they weren’t driving. 

It’s also important to know that accident forgiveness insurance only covers your first at-fault accident and doesn’t erase it from your driver’s history. So, not only will your premium rise following a second accident, future insurers can see your first incident when checking your driver’s record and may decide to charge you higher premiums.

How Much Does Accident Forgiveness Insurance Normally Cost?

Another essential thing to remember about accident forgiveness is that it will increase the cost of your auto insurance policy. Some insurance providers don’t even offer it as a service and, if they do, it may only be free for preferred customers with good records. So, if you’re signing up with a new provider or renewing your policy with one that you haven’t been with for long, chances are you’ll pay $65 – $95 more a year per vehicle.

Despite the extra money you have to spend (if your policy doesn’t include it as a basic perk), accident forgiveness insurance can be a worthwhile investment, as long as you’re a responsible driver and get in a very limited amount of collisions in your lifetime. Drivers who are considered more of a liability may not qualify for this insurance at all.

How Can Someone Qualify For Accident Forgiveness Insurance?

Like a standard car insurance policy, a driver’s ability to qualify for accident forgiveness insurance is based on a variety of factors. Along with your driver’s history, the insurer may want to verify the vehicle type, as well as the province/territory it’s registered in. 

As long as you have an active policy, your vehicle is in good condition and your driver’s record is free of any at-fault or partially at-fault incidents for at least 6 years, you shouldn’t have much trouble qualifying for accident forgiveness insurance as an add-on.

Why Do Car Insurance Premiums Go Up After An At-Fault Accident?

While car insurance providers understand that accidents can happen, they must also be smart when it comes to picking clients and offering them reasonable deals. The more responsible of a driver you are and the better condition your vehicle is in, the less risk you present. As a result, you’ll probably qualify for more coverage and a lower premium.

So, after you’ve been in an accident that you were held at-fault for, the insurer will automatically consider you riskier and raise your premium. The same goes for any past claims and traffic violations, like prior accidents, tickets and criminal convictions. More risk equals higher car insurance premiums, no matter where or when you apply.       

Accident Forgiveness Insurance FAQs

Do I need to pay a deductible if I have accident forgiveness insurance?

Buying car insurance requires a few steps, one of which is choosing your “deductible”, meaning the amount you want to pay toward repairs following a claim (the insurer covers the rest). While accident forgiveness insurance does prevent your premium from going up one time, you still have to pay this deductible if you want to file the claim. Luckily, if you pay a higher deductible, your insurer will be more likely to offer you a lower premium. Make sure to only pick a deductible that works for your budget.

Will I be covered if I’m at fault?

Yes, accident forgiveness insurance protects your premium after your first eligible at-fault accident. Although other incidents may lead to higher premiums, most standard car insurance plans come with “third-party liability insurance”, which covers the amount of legal fees that you selected when you set up the policy, similar to your deductible. Before you pick your third-party liability coverage amount, keep in mind that you will only be protected up to the specific limit in your policy. So, if you end up in a legal battle that leads to $600,000 in court and attorney fees but you’re only covered for $500,000, that means you’ll have to finance the remaining $100,000 on your own.

Do accidents stay on your record if you have accident forgiveness insurance?

Yes! Even though accident forgiveness insurance does cover you during your first at-fault accident, it can’t make the incident disappear from your insurance or driver’s history. The time limits for these types of incidents are set by the insurance provider, as well as the traffic authorities that govern the area where an incident takes place.

Is Accident Forgiveness Insurance Right For You? 

As a driver, it’s your job to act responsibly behind the wheel. Not only can reckless driving be dangerous for everyone involved, you may have trouble finding affordable car insurance, if you manage to get approved at all. Without insurance, you can’t drive anywhere legally and won’t be covered during an accident or a legal case. If you’re worried about that, accident forgiveness insurance should be a serious consideration.     

Bryan Daly avatar on Loans Canada
Bryan Daly

Bryan is a graduate of Dawson College and Concordia University. He has been writing for Loans Canada for five years, covering all things related to personal finance, and aims to pursue the craft of professional writing for many years to come. In his spare time, he maintains a passion for editing, writing screenplays, staying fit, and travelling the world in search of the coolest sights our planet has to offer.

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