How a Safe Driving Record Decreases Auto Insurance Rates

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Here's what you need to know...
  • Having a clean driving record helps keep your monthly premium low
  • The more traffic violations you have, the higher your car insurance rates will be
  • Taking a defensive driving class can lower your annual car insurance premium

Over the last 10 years, it seems as though we’ve been inundated with television and radio commercials trying to sell us car insurance.

With all of the promotional lingo, many people fail to realize that their individual driving record is the single most important factor. A safe driving record definitely translates into lower car insurance costs.

Believe it or not, how well you drive is much more important in determining your insurance rates than what you drive or where you live. A clean driving record not only keeps you safe but also makes you privy to lower car insurance premiums.

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Insurance is Risky Business


What the industry does with the premiums is invest that money with the hope that the profit it makes will be greater than any amount they have to pay out on claims you make. If that doesn’t happen, they lose money in the deal.

Because car insurance is such a risky business, companies that offer it must factor in the driving history of those they choose to insure.

Potential new customers with a history of accidents and speeding tickets have demonstrated they are much more careless behind the wheel than those with a clean record.

That means they represent a higher risk and must be charged a higher rate. Drivers with a cleaner record represent a lower risk and can be given a lower rate.

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It’s All about the Points

Almost every insurance company uses a complicated formula that takes into account many factors, including the driver’s age, gender, and driving history.

Your driving history is a combination of the number of accidents on your record and the number of points on your license.

Dealing with the accidents first, the insurance company takes into account the seriousness of each recorded accident, whether or not you made a claim, and how much has been paid out in any claims you’ve made.

In terms of the points on your driver’s license, the state of Massachusetts and its Safe Driver Insurance Plan is a good example to show how this works.

IIn Massachusetts, a driver’s license is assessed a certain number of points if they are more than 50 percent at fault in an accident. Points are assessed for every violation. As those points add up, the insurance costs will get higher.

The Stack of Paper Comparison


Fortunately, even if you’re stuck with high car insurance rates today, it doesn’t necessarily have to stay that way. Because of the way accidents and violations are tracked, it’s possible to end up with a clean driving record in the future, which will result in lower rates.

But in order to accomplish that, drivers need to take advantage of insurance company forgiveness by maintaining a safe driving record into the future. Continued acceptance or violations will only exacerbate the problem.

Think of it in terms of a stack of papers on your desk that you have determined must be thinned out from time to time. You could decide that once a month you will take the paper at the bottom of the stack and discard it.

As long as no more papers are added to the stack, you will eventually eliminate the stack completely. This is how most insurance companies treat accidents and violations.

Usually removing items at the bottom happens in a cycle of six months to a year. It can be longer in some states and with some insurance companies.

Using the one-year example, you may have a speeding violation from last year and an accident from last month. Upon the first anniversary of your speeding violation, it could disappear from your record; a year later, so will the accident.

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