Preferred Risk Auto Insurance

A vehicle insurer’s success depends on how good they are in assessing risk. Generally outstanding drivers with no recent claim or traffic ticket and several years of driving experience are categorized as preferred risk because they are much less likely to make a claim. They get offered preferential rates, which are cheaper than standard prices and yet more likely to be profitable for the company.

What Is Preferred Risk Auto Insurance?

Generally, applicants are grouped according to their risk profile. As the name suggest preferred risk insurance is the lowest risk group in any line and therefore accommodated by almost every company. In simple terms, a preferred risk policy is offered to crème de la crème of the risk groups and they are the best drivers in terms of car insurance.

How to Find a Preferred Risk Automobile Insurance Company?

Almost every insurer would love to have this lowest risk group of policyholders who are not only good drivers but lives in a safe zip code, has good credit score, a respectable job and drive a sensible low risk car. They are probably the least problematic policyholders since they rarely make claims and pay their premium without any problem. You can get the most competitive car insurance quotes if you fit in this group of motorists.

Generally, a best deal preferred risk policy is more likely to be offered by the largest auto insurance companies as they are better equipped to combine good coverage with low prices in order to win the lowest risk driver group over. Therefore, you should start your search with these insurers if you consider yourself to be a low risk policyholder.

Few insurers may promote themselves as a preferred risk car insurance company. However, this is hardly anything to boast about or something you should care much about since you are already spoiled for choices. Any of these best car insurance companies would probably do and therefore you can pick the cheapest one after getting several quotes.

How to Define a Preferred Risk Driver?

Insurance companies almost always classify the risks they are pricing. For example, areas with high risk of flooding, earthquake or hurricane are categorized as high risk due to highly distractive nature of these natural occurrences. The same applies to vehicle insurance where companies classify the drivers and automobiles insured.

Typically, insurance companies divide drivers into four categories. From the most to least favoured, these are preferred, standard, substandard (high risk) and assigned risk. Preferred drivers are the least risky based on their driving skills and records, and get the lowest rates. Standard motorists are considered “average” in terms of risk, and pay average premiums. Substandard or nonstandard applicants are considered the most risky to insure, and they pay the highest premiums. Assigned risk drivers are usually denied coverage or cannot find affordable policies on the market and have to seek coverage through state assigned risk pool.

Preferred drivers have excellent driving record, long experience, and good credit scores. They use their vehicles for commuting relatively short distances, and not own a sports car. They are simply the best drivers with plenty experience and long clean driving record. These days you can add good credit score, jobs and education to qualifications as more and more companies take these qualities into account along with driving records.

Here is what you need in order to become a highly desired policyholder and get the best car insurance rates.

  1. Probably one of the first conditions for most insurers is being at least 25 years old. Does car insurance go down at 25? The answer is usually yes and this makes 25 a significant age for vehicle insurance.
  2. Another question that helps in explaining why you get discounts if you are a better than average risk is does your insurance go up if you get a ticket? So, you should avoid getting tickets for things like speeding, reckless driving, illegal turn or obstruction.
  3. You should avoid claims on your policy wherever you can and being a good driver helps a lot in that aspect. If you want to keep good rates you probably need to know how much does your insurance go up after an accident?
  4. Things like credit score, home ownership and reputable job are influential factors these days and affect your classification by most insurers. Some insurers wouldn’t even consider you as standard risk if you have a particularly bad credit score and place you in non-standard risk group.
  5. You should avoid buying a high-risk car if you want to get preferred risk auto insurance rates. Your car can increase your risk profile high enough to knock you down to lower risk groups.

Basically, you get all the favored driver discounts when you qualify as a low risk car insurance applicant and that is why your premium would be cheap.

How Much Can You Save on Car Insurance with a Preferred Risk Policy?

When you are considered low risk you qualify for discounts that can be as much as 50% depending on where you live and the insurer you are with. A favored applicant is basically a good driver with experience, no claim and traffic ticket. It is normal that most companies will offer their best rates to such people who have proved to be reliable drivers and profitable policyholders for their insurers.

First of all, you need to be a pretty low risk driver to qualify for favored risk discounts. However, being a preferred risk policyholder isn’t just about driving these days. You need to have a good credit, job and live in a safe zip code too. When you have these qualities you can qualify for discounts on home insurance and other lines as well. For example, you can save more by bundling home and auto insurance.

In any case, you need to shop for automobile insurance to make the most of your qualifications. When you have problems with your credit report or driving record you would have limited choices in terms of insurers. On the other hand, every insurer would offer their best rates when you are a low risk applicant. So, there is nothing holding you back and you can compare car insurance from different companies without worrying about how they will respond. In some states, you can save as much as 80% by shopping for the best deal alone.

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