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What Predicts Insurance Risk Best? The Answer Really Shouldn’t Be A Surprise

In early July, one of the top insurance companies in the U. S. released shocking findings: driver’s behavior is the best predictor of their risk of being involved in an accident. Strangely, this news probably didn’t come as any surprise to car drivers who’ve been buying insurance all these years. The odd thing is insurance companies needed to spend fifteen years analyzing driving statistics to realize that what a person does behind the wheel is directly linked to their likelihood of being involved in a crash.

Here’s an example of the driving behaviors that seem to be good indicators of risk: the miles driven. The more time you spend on the road the better your odds of being in an accident, regardless of your age, marital status, or car safety features. Additionally, the time of day you are driving can also impact your risk. Again, this makes sense. Driving at night is more treacherous because of reduced visibility and other factors; therefore, if you do most of your driving after sunset your risk will be higher.

One of the most obvious of these driving behaviors is braking. Drivers who slam on their brakes a lot are more at risk than those who do not. These are the folks who probably aren’t following good defensive driving techniques: staying a good distance behind the cars ahead of them, paying attention to the road, slowing down at intersections. They may also be the ones who slam on their brakes to avoid collisions.

While no one should really be surprised that how people drive affects their auto accident risk, what is interesting is how this information could impact car insurance premiums. Currently, auto insurance premiums like other types of insurance rates are determined by through underwriting. Basically that means statisticians have compiled information about drivers who share your characteristics – your age, your number of accidents, etc. – and based on that information your potential risk to the insurance company is determined. If people who share those traits don’t file many claims, your premiums are lower. If they file lots of expensive claims, your premiums skyrocket.

Now your premiums could literally be based on how you actually drive instead of on statistics based on information that sometimes has little impact on your accident risk. If you’re responsible behind the wheel, you get rewarded by saving money on your insurance. If you’re not, you’ll pay more and, hopefully, will work harder to become a safer driver. That last part would not only benefit drivers with high premiums but everyone who shares the road with them. If everybody pays more attention, brakes earlier, and drives only when necessary, then accident rates should decline and that is good news for everyone except auto body repair companies.

Of course if you don’t want to wait until this personalized approach to car insurance becomes standard to start saving money, some insurance companies recommend you take a proactive approach: enroll in a defense driving course. Successfully completing the course could reduce your premiums by one-tenth and can also reduce the points on your driver’s license. Not only could the course save you money but could teach you some safety strategies that will help when your premiums do become based on your own driving behavior and not a statistical profile.