As the insurance space becomes more competitive, insurance companies such as Allstate, Statefarm, Geico and others look for any competitive advantage they can get. One of the ways these insurance companies are not only attracting customers but also retaining them is through safe driver policies. You may have heard this called Accident Forgiveness by a large insurance provider.
What is a safe driver policy?
Insurance companies offer existing customers discounts on their deductible if they have a track record of being a safe driver. An example of this would be if you deductible is $500 and you get into an accident. Due to not getting in any previous accidents over the past few years, the insurance company will only charge a portion of your deductible, say $100, instead of the complete deductible of $500.
Why do insurance companies offer this?
Acquiring new customers is expensive, retaining them is often cheaper. Features like safe driver policies increase the chance of an insurance company keeping their customers. It is widely known that customers most frequently search for new insurance after their rates increase. This often occurs right after an accident happens. If the company is able to decrease your out of pocket cost at the time of the accident but still increase your monthly rates, by keeping you long term, they most likely make more money off of you. So retaining a customer at a higher monthly rate is worth the investment of a temporarily reduced deductible.
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