Published on July 30th, 2022
Here’s something that might shock you if you have never looked for auto insurance policies; they are expensive. Auto insurance policies are expensive, but they are necessary as well.
You cannot drive any vehicle legally on the road without proper liability coverage (and a personal injury protection plan in 12 states). That’s just the mandatory policies. You also need to have optional coverages that are very important as well.
There are a lot of factors that affect your auto insurance rates. From your driving record to your age and gender, every little factor is taken into consideration when deciding the rates of your car insurance policies.
So is there no way to save money on your insurance expenditure? Must you always pay a fortune to secure your car and your health while you are on the roads? Let’s find out.
Your Driving Record And Car Insurance
Perhaps the most important factor that vehicle insurance companies consider while deciding the insurance rates is your driving record.
They look at your driving record and every little detail about your driving for the past 7 years. You can even access your driving record by getting your CLUE report.
Companies look for your previous accidents, speeding tickets, any instances of rash driving, DUI charges, etc.
From minor speeding tickets, and parking tickets, to severe charges such as a DUI charge, everything will increase your auto insurance rates. But why?
Assessment Of Risk
Insurance companies, not just auto insurance, make money not by selling insurance policies, but by properly and efficiently managing risks. The better they are at reducing the risk of an auto insurance claim, the more money they make.
Their goal is to increase the number of policyholders who pay insurance premiums on time and decrease the number of policyholders who make an insurance claim to a minimum.
The bigger the gap, the more profitable the company will be. Insurance companies do not want to get people who are more likely to make an insurance claim.
Your driving record tells a lot about your driving methods, your awareness level, how likely you are to drive responsibly, and most importantly, how likely you are to be in a car accident.
If you have a pile of speeding tickets and drive rashly, it is obvious that you are more likely to be in a car accident than someone who always drives under the speed limit.
Just because your driving record is poor, the auto insurance company cannot stop you from buying a policy. So to offset the risk of you making an insurance claim, they charge you a lot more than what they charge normal, responsible drivers.
Different traffic violations affect your car insurance rates differently. This rate difference is also dependent on the state you are in.
For example, rash driving in Florida will increase your insurance rates by around 25%. But California takes rash driving more seriously (probably because of all those Prius drivers. So a rash driving charge would increase your insurance rates by almost 150%. That’s a big leap.
A DUI charge is considered the worst for your auto insurance rates, and it is obvious. If you are not worried about getting yourself killed in a car accident, why would you care about the car? Across all states, a DUI charge can increase your insurance rates by a whopping 400%.
So the best thing to do if you don’t want to spend a fortune on an auto insurance policy is to avoid mixing drinking and driving.
Be A Good Driver, Save Money On Auto Insurance
Just like being a bad driver will result in you paying more money, being a good driver will help you save money on car insurance.
Referring back to the reason why auto insurance companies charge bad drivers more, the opposite is true for good drivers as they pay insurance premiums on time and do not carry too much risk to the company. A win-win for both.
How Much Can You Save?
The actual amount that you can save varies from state to state and company to company, but if your driving record is clean, you can expect a minimum discount of 10% and a maximum discount of 40% on your auto insurance premium rates and policy price.
For example, if you are looking for car insurance in Santa Ana, California, and have:
- Had no DUI charges
- Held a driving license for at least 3 years
- Have one or two points
- Had no major accident
- Had no DUI charge
Then you are eligible for a big discount for most of the auto insurance policies. But the condition of a “good” driving record may vary a little from one state to another. You can contact your auto insurance company to get more details about it.
While having a clean driving record will automatically reduce your car insurance and premium rates, there are some other ways you can save money as well. These are the indirect discounts that you get for being a responsible driver.
After you have gotten the auto insurance policy, if you do not make any claims during the policy period, you get a no-claims bonus. This bonus will reduce the cost of the policy by a percentage (usually 10%-15%) at the time of renewal.
If you do not make any claims in the consequent year, you get a bigger discount (usually around 20%-25%). The perks of driving carefully are sweet.
Defensive Driving Discount
Many auto insurance companies offer great discounts if you take a defensive driving course, or something similar. Contact your auto insurance company and check which course they prefer and save money on auto insurance premiums.
Drive safely and not only can you save hundreds of dollars in auto insurance rates and insurance premiums, but also prevent yourself from getting in an accident. Drive safe and save more.
Image Source: flickr.com