August 20, 2010

Maintaining A Clean Driving Record For Insurance Purposes

A clean driving record is one of the best ways insurance companies have to determine what type of risk you are because it is based on your performance over a specific period of time. This is perhaps the best indication of how you will drive in the future and how much an insurance company should charge in premiums. When requesting an auto insurance quote, keep in mind that if your driving record is very bad, a company could deny you insurance.

Although other factors are considered such as where you live, the type of car you drive, your age and whether or not you use the car for work, it is your driving record that will carry the most weight in determining your risk. Insurance companies are particularly concerned with points, accidents and claims. However, insurance companies may have different underwriting guidelines and differ as to how much a claim, for example, weighs in determining your rate. One company may determine that a minor claim in the last three years will have no impact on your rate, while another may determine that your rate will increase because of that claim.

Using the last three years as a baseline for your clean driving record, consider an example where you have had two claims and a point because of a moving traffic violation. For some companies, these blemishes could push you into a high-risk bracket where insurance could become very expensive. A DUI, of course, could take you off the road for some time. Thus, when looking at an auto insurance quote, it is a good idea to ask what specifically the company is looking for in your driving record that would be considered a negative. Younger drivers not on a parent’s car insurance policy can expect to pay more for premiums because of their inexperience behind the wheel. But if they maintain good driving records, their rates could decrease as they age.

Insurance companies use complex risk analysis models to determine how much revenue premiums will bring in as opposed to how many dollars in claims will have to be paid out. This analysis is essential to realizing a profit and staying in business. The number of accidents in a highly-congested zip code, for example, can be analyzed and studied to determine if that area is a higher-than-normal risk for issuing policies. An insurance company can also judge, by looking at crime statistics in your area, if car thieves steal your make of car more than others. However, there is no way to foresee how an individual driver will perform on a day-to-day basis, which makes your driving record particularly important. Accordingly, it always pays to be a safe driver.