If you are an insurance applicant looking for providers offering optimal coverage at the best price, then you are at the right place. Zen Inure will help you find your best-fit policy, allowing you to drive in peace. But have you ever wondered about the insurer or what kind of client they prefer or regard as best fit?
Step into the shoes of an insurance provider, and when you look through their lens, you will understand the type of applicants they prefer and are willing to offer discounts to. So basically, insurance companies love applicants with good driving habits and a clean record. This shows the low risk factor of an applicant and their lower likelihood of filing a claim.
In short, your driving habits play a substantial role in deciding your premium, i.e., safe driving = low premium. On the flip side, the more rash or risky driving you do, the more your insurance costs will increase.
In this article, we’ll be discussing good and bad driving habits, the impact of driving records & safety gears on premiums, and much more. All this will help you be an effective driver and become a favoured insurance applicant, enjoying low premiums.
So, let’s begin understanding how your driving habits impact your insurance rates.
Driving record & premium - Understanding the link
Whenever an applicant applies for motor vehicle insurance, the first thing the insurer does after verifying the details is to scan the driving records and then proceed to the next step. This is done by reviewing the client's accident history, traffic violations, and claim frequency. After doing this and considering a few other factors, the car insurance provider calculates the premium.
Let us discuss the link between driving records and premiums in detail -
Accident history: In case your driving history reveals that you have been involved in multiple accidents in the past - whether due to your fault or not - you get tagged as a high-risk driver by the insurer. Your past reflects poorly on your future. Frequent accidents suggest a high likelihood of filing claims.
So, the more accidents, the higher the premium.
Traffic violation: It is very common for insurance providers to look into an applicant's LTO record file for tickets related to illegal parking, speeding, and traffic rule violations. For you, all this might be small, genuine mistakes; but for an insurer, it is a window suggesting how careless a driver you are.
So, the higher the traffic violations, the higher the premium.
Claim frequency: Your past insurance records (if applicable) are also scrutinised by the insurance providers for checking your claim frequency. If a client has made several claims, even for minor damages, it reflects poorly on them, showcasing their dependency on insurance.
So, the higher the claim frequency, the higher the premium.
Driving habits that increase your premium
Let us now discuss some everyday driving habits that increase your premium -
Speeding: Exceeding the speed limit not only puts you but also others on the road at risk. It signals you as a risk to the insurer, and with just a few speeding tickets, your premium will increase in the next cycle.
Aggrieved driving: Actions like sudden lane change, tailgating, road rage, etc, are all red flags when it comes to insurance applicants and drivers in general. All these actions increase the risk of accidents, and both insurance providers and authorities won’t ignore them; while one will charge a higher premium, the other will charge you a fine.
Drunk driving: If you are ever caught drunk or intoxicated while driving, you'll surely end up in some serious trouble. Not only will you be penalised by the authorities, but your insurance policy can get cancelled. If not, your premium would hike substantially.
Distracted driving: In the Philippines, one of the primary reasons for road accidents is distracted driving, wherein the driver is either texting or browsing social media while behind the wheel. Irresponsible behaviour can cost someone their life or leave them with an injury. This act too is punishable and hikes the premium.
Photo from FreepikDriving habits that decrease your premium
Let us now come down to discussing driving habits that reflect positively on your insurance rates -
Defensive driving: Opting for the defensive driving technique will help you make safe and well-informed decisions while driving. You can do so by keeping a safe distance from vehicles in front of you, avoiding distractions while driving, adapting to road & weather conditions, and being aware of your surroundings.
Safe driving practices: Applicants who follow safe and secure driving practices like sticking to the speed limit, signalling before turning, and obeying traffic rules & regulations are favoured by the insurance providers.
Maintaining a clean driving record: If an applicant can maintain a clean driving record for several years - no violation, no accident, you’ll enjoy the benefit of ‘no-claim bonus’.
Advanced driving course - Wanna demonstrate your commitment to safe driving practices? Take up the advanced driving course. Many insurance providers offer discounts to clients with such certification. They have a lower probability of getting into an accident or breaking traffic rules.
Impact of car's safety tech on premium
Another smart way to reduce your insurance cost is to install advanced safety gears - this will not only help you drive safely but also reflect positively on you in front of the insurer. Some of the popular car safety features you can get installed include: parking sensors & back camera, GPS & navigation system, and Lane Departure Warning system.
Furthermore, installing telematics devices is recommended, as they track your driving speed, mileage, and braking patterns. Insurers offer such devices for safe driving practices, which eventually lead to potential discounts.
Photo from FreepikPractical tips to keep your insurance costs low
- If you do not drive often, go for ‘Pay-Per-Mile’ policies. Here you are charged as per your vehicle usage.
- Pay attention to your vehicle maintenance, take it out for regular service, change the fluids regularly, check the brake system & tyre pressure. All this will make your car less susceptible to accidents or breakdowns, resulting in lower insurance costs.
- Try bundling your insurance policies, such as car, life, home, etc., with the same provider. This will make you eligible for a discount.
- Never settle for the first insurance provider you come across, or renew your policy with the same provider year after year. It is always good to shop around a bit and settle for the provider with the best deal.
Factors other than driving are impacting insurance rates
- Car type & model: Cars with expensive repair work, like luxury cars, sports cars, and vintage cars, are typically costly to insure.
- Location & risk level: Applicants living in high-accident or flood-prone areas often find it expensive to insure their vehicle, as there is a greater risk associated.
- Coverage: Higher coverage demands more protection, leading to higher premiums. On the contrary, opting for bare minimum coverage, like CTPL, is much more affordable.
- Deductible: Higher deductibles mean lower premiums; however, you’ll have to pay more from your pocket before raising a claim, in case of an accident.
Also Read: What is covered (and not covered) in a car insurance policy in the Philippines
Bottom line
Your insurance premium indeed depends on several factors, such as coverage, driver’s age, location, claim history, safety gear, etc. But one essential factor that most clients forget is their driving behaviour - many insurance providers reward clients for good and safe driving. How? The reward comes in the form of discounts and reduced premiums.
Furthermore, safe driving will protect you, your family, and others on the road from injuries or hospitalisation. So, be mindful of your decisions when behind the wheel and enjoy the following perks - discounts, peace of mind, and lower premiums.
FAQs
Q1. Can insurance premiums be lowered over time?
Ans. Yes, your insurance rates can go down, given that you maintain a clean driving record - one with no accidents, traffic violations, fines or penalties.
Q2. Is it a good idea to install a telematic device in the car from an insurance point of view?
Ans. Yes, installing a telematic device can be a good way to lower insurance rates; however, make sure you drive safely.
Q3. Will switching my insurance provider help lower the premium?
Ans. It is advisable to compare three to four providers before purchasing a new policy or renewing an existing one, because of the different quotations on offer. You can also make a switch at any time.
Q4. Does the policyholder's age influence insurance cost?
Ans. We can say so. For instance, young drivers usually pay more premiums because they are considered high-risk clients by the companies.
Q5. I recently got a speeding ticket. Will it impact my insurance cost?
Ans. While it entirely depends on the insurance provider, whether one ticket will affect your insurance cost. However, multiple tickets will surely increase your rates.
Q6. How often does an insurance provider go through a client’s driving record?
Ans. Most insurance providers in the Philippines review their clients' driving records annually, at the time of policy renewal.
Q7. While deciding the rate, do insurance providers consider weather-related risks to a client’s vehicle?
Ans. Yes, an insurance provider takes into consideration several risks, including weather-related ones, when deciding cost. For example, if you live in a flood-prone area, your premium will be adjusted accordingly.
Q8. Will installing a dash cam impact my insurance premium?
Ans. Some insurance providers offer a discount to clients with a dash cam installed in their vehicle, as the device provides evidence in case of disputes.
Q9. What are the consequences of missing a premium payment?
Ans. Missing an insurance payment can lead to severe consequences, like policy cancellation, claim rejection, and high costs for reinstating the policy.
Q10. Do a client's years of driving experience impact the premium?
Ans. Usually it does; the more years of driving experience you have under your belt, the higher the chances you have of enjoying a lower rate.
Q11. Can I negotiate with the insurance provider over the premium?
Ans. While the base premium rate is set, you may be eligible for discounts if you bundle policies or have a good record.
Q12. Will taking an advanced driving course help lower the premium?
Ans. Of course, insurance providers favour clients with advanced driving course certification, as they not only possess excellent driving skills but are committed to safety. Thus making them the best of applicants, who qualify for discounts and low cost.
Q13. Which driving habits do insurance providers favour?
Ans. Driving practices like practising defensive driving, avoiding distractions, adhering to the traffic rules and road signs, and maintaining a good driving record are favoured by insurance providers.
Also Read: What happens when your policy expires? Renewal tips & reminders
