Being a High-Risk Driver Affects Your Auto Insurance
Your auto insurance premium is unique to you and is largely based on how likely you are to use it. A high-risk driver is one who is more likely to file a claim. To determine your riskiness, your auto insurance company uses a complex algorithm that weighs in a variety of factors to come up with your auto insurance score.
What Is Your Auto Insurance Score?
You probably already know what your credit score is and how it affects your ability to get loans, the rates that you pay, and the financial options that you have. Your auto insurance score is similar. This score affects what premium rating you qualify for and how high your monthly auto insurance premium will be.
Like your credit score, your auto insurance score is a measurement of your riskiness. If you are shopping for auto insurance, knowing your insurance score and what you can do to improve it can help you make wise choices.
Auto insurance scores typically range between 200 and 997. If your score is 770 or higher, you enjoy lower auto insurance rates. If your score is below 500, you have limited options and pay higher monthly premiums.
While your score is not something that you have access to, you probably already have a general idea of where you fall on that range. If you have rarely, if ever, filed a claim and you have a good credit score, then your auto insurance score is probably high. On the other hand, if your credit score is low and you have filed multiple claims, your auto insurance score is likely on the lower end of the spectrum.
Auto Insurance Score vs. Credit Score
Both your auto insurance score and your credit score are measurements of how risky you are, whether to lend money to or to insure. Their main differences lie in who uses them and how they are calculated.
Credit scores are generated by three credit bureaus. These bureaus maintain files on borrowers that include information such as payment history, how much money is owed, the length of credit history and the types of credit used. The better the score, the more financial opportunities you have.
Auto insurance scores, on the other hand, are metrics used by auto insurance companies that determine how much of a risk you are to insure. In Nevada, auto insurance scores may be based in part on an individual’s credit score, along with other factors that assess how likely a policyholder is to file a claim.
Factors That Affect Your Auto Insurance Score
Unfortunately, the algorithms that generate your auto insurance score are proprietary, meaning very few people working for the insurance company knows this information. However, we do know that auto insurers use information from two databases, including the Automated Property Loss Underwriting System and the Comprehensive Loss Underwriting Exchange.
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Factors That Likely Affect Your Score:
♦ Your Age:
Young drivers typically pay more for auto insurance than seasoned drivers who have decades of driving experience under their belts. The reason for that is simple: inexperienced drivers are less likely to accurately assess risks and make the right spur-of-the-moment judgment calls, which results in a greater likelihood of them ending up in an accident. Even if you are a careful driver that has never been in an accident, as a young driver, your age bracket will automatically result in a higher premium.
♦ Your Living Arrangements:
There is a reason that some auto insurance companies provide homeowner discounts. In the eyes of your auto insurance company, owning a home is associated with stability and low-risk behavior. While not all auto insurance companies give better rates to homeowners versus renters, if you have recently bought a home, your auto insurance agent may be able to help you score a better rate on car insurance.
♦ Your Financial History:
When evaluating a policyholder’s “riskiness,” auto insurance companies typically run a “soft” credit check. In fact, the National Association of Insurance Commissioners reports that about 95% of auto insurance companies use credit-based insurance scores in states where it’s legal for them to do so, including Nevada. That’s because many studies and risk assessors have shown that a person’s financial history is a strong indicator of how many claims they will file in the future.
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♦ Your Driving Record:
Perhaps the most significant thing that puts you in the “risky” category is your driving history, particularly how many traffic violations are on your record and how many at-fault accidents you’ve been in.
♦ Your Claims History:
Because past behavior is a strong indicator of future behavior, at least as far as your auto insurance company is concerned, you’ll pay a higher premium if you’ve filed multiple claims in the past.
♦ Your Gender:
In Nevada, auto insurance companies can base their rates partly on a policyholder’s gender. Because men are statistically riskier drivers, they typically pay a higher auto insurance rate than women.
♦ Marital Status:
As a whole, married drivers are safer drivers and therefore pay less for auto insurance coverage than their unmarried counterparts.
♦ Geographical Location:
Different geographic locations have different exposures to risk, resulting in varying auto insurance rates.
♦ Years of Driving Experience:
Inexperienced drivers pose a greater risk to the insurer and will automatically pay more for auto insurance coverage, regardless of their age.
♦ Previous Insurance Coverage:
Any lapse in coverage will result in a higher monthly premium. Drivers who have never had a lapse in their auto insurance coverage are statistically less likely to be involved in a collision.
♦ Vehicle Type:
If you drive a vehicle that is more likely to be stolen, you can expect to pay more for auto insurance coverage. The age of a vehicle also affects the rate. The bells and whistles in your auto may cost more to insure because it would cost more to replace. Year, Make, Model are some of the many factors in premium costs.
♦ Vehicle Use:
Your auto insurer will want to know why you’re driving your vehicle. If you drive every day to work or school, your exposure to risk is greater than that of someone who only drives once a week to go to the grocery store.
♦ Miles Driven Annually:
The more time you spend on the road, the more likely you are to get into a collision. Therefore, those who put more annual miles on their vehicle than the average driver pay a higher premium.
How Distracted Driving Affects Your Auto Insurance:
Over 25% of all auto accidents are caused by distracted drivers that involve cell phones. Texting while driving takes your eyes off the road and your hands off the steering wheel and is a distraction from thinking about driving.
Texting While Driving:
In America, over 1,000 people are hurt due to drivers that are distracted when driving, and 9 people every single day are killed from cell phone users while driving.
In Nevada, it is illegal to use a hand-held phone for calling or texting while driving, and if you are caught texting and driving, you could pay a very steep fine, have your license suspended, your auto insurance rates could go up, and you could even spend time in prison.
Woman Indicted in Deadly Texting and Driving Case: http://www.foxnews.com/us/2017/08/03/woman-indicted-in-deadly-texting-and-driving-case.html
Risky Behaviors of Drivers Who Use Alcohol and Marijuana
Impaired driving, also called driving under the influence, refers to operating a vehicle while impaired by alcohol or recreational or prescription drugs. Unsurprisingly, DUIs result in thousands of deadly crashes in any given year.
Safe driving depends on several factors, including your ability to follow posted speed limits and road signs, pay attention and respond to what other drivers are doing.
Those who use alcohol and marijuana before getting behind the wheel are among the most dangerous drivers – they tend to be unpredictable, take risks and drive aggressively, posing a danger to everyone on the road.
What Makes Driving Under the Influence So Dangerous?
Both alcohol and marijuana significantly impair the driver’s judgment, motor coordination and reaction times.
Multiple studies show a direct relationship between how much THC (marijuana’s primary psychoactive chemical) is in the individual’s blood and their inability to safely operate a vehicle. Marijuana is also the illicit drug that is most often found in the blood of drivers involved in fatal accidents. In fact, two large European studies concluded that drivers who had used marijuana were about twice as likely to cause a fatal crash than drivers without impairment.
Similarly, alcohol-related driving fatalities account for a significant portion of total vehicle fatalities in the United States. In 2019 alone, over 10,000 people died due to drunk-driving crashes.
Nevada Insurance Enrollment Can Help Safe Drivers Save Money
Safe drivers are far less likely to be involved in an auto accident and typically enjoy lower auto insurance rates. Our agents can help you determine whether you qualify for safe driver discounts. If your driving history is less than perfect, an auto insurance agent can help you look for ways to find lower rates and shop around for affordable coverage.
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