Drive your way to lower auto insurance rates

Tamara E. Holmes 

You can’t control some factors that affect your auto insurance rates, such as your age and your neighborhood. But one factor that you can control is your driving record. If you make safe driving a priority, your pocketbook may benefit.

When auto insurers determine your premiums, they consider how risky you are as a driver. If you have a lot of accidents or violations on your driver’s record, you are riskier to insure and your insurance premium will be higher.

Auto insurers typically reward safe driving by offering safe driver discounts. Allstate, for example, says drivers can save up to 45 percent through safe driving discounts. State Farm also offers a number of safe driving discounts, including a 10 percent discount if a driver goes three years without any moving violations or at-fault accidents.

Nationwide’s “Vanishing Deductible” lets you earn $100 off your deductible up to $500 for every year that you remain accident-free. So if you have a $500 deductible and remain accident-free for three years, you’ll earn a $300 credit. If you get into a wreck, you would pay just $200 toward your deductible before your insurance kicks in to cover damage.

Setting driving penalties

In addition to rewarding safe driving, auto insurers routinely penalize unsafe driving by raising rates when drivers commit certain violations. The amount of penalties varies from state to state, since state insurance regulators can impose limits on penalties.

For example, in North Carolina, auto insurers must lay out proposed penalties in what’s called a Safe Driver Incentive Plan, says Kerry Hall, a spokeswoman for the North Carolina Department of Insurance.  To ensure that drivers aren’t penalized unfairly, those plans are subject to review by the insurance commissioner, Hall says.

The amount of such penalties also varies depending on the driving infraction. For example, a DUI likely will lead to a bigger penalty than a ticket for driving 10 miles per hour over the speed limit.

In North Carolina, a driver with a $300 premium who’s caught speeding faster than 75 mph might see his premium rise to $540 – an 80 percent increase, according to the North Carolina Department of Insurance. By comparison, that same driver caught speeding 10 mph or less might see his premium rise from $300 to $390, while a drunk driver could see that $300 premium soar to $1,320.

A proactive approach

Some states and auto insurers let drivers take more of a proactive role when it comes to benefiting from safe driver discounts. For example, the New York State Department of Motor Vehicles’ Point and Insurance Reduction Program lets drivers take an accident prevention course to save 10 percent on auto insurance premiums. State Farm offers policyholders in some states a 5 percent discount if they complete a defensive driving course. Drivers 25 and under can score a 15 percent discount from State Farm if they complete a “Steer Clear” driving safety course and haven’t racked up any moving violations or at-fault accidents in the past three years.

Many drivers with good driving records shop around to see which auto insurer will offer the best deal. In fact, the safe driver discount ranks as most important feature for auto insurance policyholders, according to comScore Inc.’s 2012 Online Auto Insurance Shopping Report. A low deductible was the second most important feature, and roadside assistance was No. 3.

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