How Safe Driving Habits Lower Your Car Insurance Premiums

There are several ways to lower your auto insurance rates. For example, you can purchase a vehicle that has a positive CLEAR (Canadian Loss Experience Automobile Rating) score; you can install an alarm system in your car; or, you can raise your deductibles, and drop expensive coverages you don't need. The most effective method for reducing your premiums over the long run is to adopt safe-driving habits. A lot of consumers would be surprised by the affect it can have on their car insurance rates.

We'll briefly describe how insurers determine policyholders' premiums below. We'll also explain how a single collision can cause your rates to skyrocket (unless your insurer "forgives" you). Lastly, you'll learn several ways to avoid an accident that can otherwise affect your rates for years.

How Auto Insurers Calculate Premiums

Car insurance companies use formulas to calculate premiums for their policyholders. These formulas take several factors into account, all of which help insurers evaluate the likelihood of future claims. For example, the make and model of your vehicle is considered since many cars are associated with higher repair costs and frequency of theft. Your age is also considered; young drivers with scant experience behind the wheel can be expected to generate more claims than their older counterparts.

One of the most important factors used to determine your premiums is your driving history. Do you have tickets on your record? Does your record contain an at-fault collision? These and other details are vital to an insurance company's ability to assess whether you will file claims in the future. A driver who has earned several speeding tickets and caused an accident is likely to make poor decisions behind the wheel. Such decisions will increase the odds of another accident for which the insurer must pay claims.

A Single Accident Might Translate Into Sky-High Rates

For every auto collision, at least one person is considered at fault. Even in the event that two drivers collide, and a police officer concludes that neither party is responsible for the event, car insurance companies feel differently. They need to identify an at-fault party in order to determine how compensation for property damage and injuries are paid.

Because the potential cost of a collision is substantial, insurers will normally boost the at-fault driver's rates following the event. (The exception is when your policy includes an "accident forgiveness" clause.) The rate increase is not to pay for damages and injuries stemming from the accident. Rather, it is an adjustment for the increased risk assumed by the insurer that you will make a future accident-related claim.

This is the reason a driver with a spotless driving record will usually see her premiums rise dramatically after causing an accident. Moreover, it is the reason to adopt and practice safe-driving habits.

A Few Safe-Driving Habits To Practice

Most tips for driving safely will be intuitive to you. But it's common for people to grow accustomed to their current driving habits, even if those habits increase the risk of an accident. We forget what we learned while earning our full driver's licenses. With this in mind, consider the following 4 reminders:

1    Allow space in front of your car. Keep two full car lengths between your vehicle and the one in front of you. If the other car stops suddenly, you'll have more time to react.

2    Keep your eyes moving. When driving long distances, it's easy to fall into a stupor, staring ahead of your car rather than taking in the entire environment. Avoid doing this. Instead, watch the front, sides, and check your rear view mirror. Your eyes should not be fixed on a single point for more than few seconds.

3    Note the speed limit. Getting caught speeding will result in a ticket, which will appear on your driving record. This alone can increase your car insurance premiums. But speeding also increases the risk of an accident. Follow the posted limits.

4    Pull over if you're exhausted. When your mind is tired, your reaction time decreases substantially. In severe cases, your vision may become partly impaired. Consider pulling to the side of the road, and stretching your legs. Take a short nap, if necessary. You'll be much safer when you get back on the road.

Driving safely is one of the best methods for reducing your auto insurance rates. Adopting a few small habits can save you thousands of dollars in premiums over the long run.
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How Safe Driving Habits Lower Your Car Insurance Premiums
How Safe Driving Habits Lower Your Car Insurance Premiums
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