What is a preferred risk driver?

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In a nutshell...
  • Shopping for car insurance can sometimes be confusing
  • Understanding insurance jargon can help you make the right decision
  • Always compare at least three different quotes before making a final decision

When shopping for car insurance, you may see a great deal of industry jargon as well as advertising terms that you may not understand. “Preferred Risk” may be one of those terms.

Preferred Risk is an industry term for what car insurance companies advertise as “Good Driver Discounts.” Basically, a Preferred Driver is one who abides by the rules of the road while keeping a clean record and having a certain amount of driving experience.

These drivers are preferred because car insurance companies are able to spend less money to insure them due to the fact that statistically, they tend to get in fewer accidents and file fewer claims for damage.

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Who is a preferred risk driver?

A Preferred Driver is defined as a driver that receives preferential treatment from car insurance companies due to their outstanding conduct and record, as well as taking initiative when it comes to safe driving.

There are a few ways to attain preferred risk status. The first, and most important is to have a clean driving record. A clean driving record is one with little to no moving violations. A moving violation is any ticket you receive for breaking the rules of the road while in motion.

Such violations include but are not limited to things like excessive speeding, drunk driving, illegal u-turns, reckless driving, dangerous lane changes etc. Anything a reasonable person (and the law) might consider unsafe will probably get your preferred risk status taken away.

When you become a preferred risk driver, you are often entitled to discounts from your insurance company.

Most, but not all insurance companies offer some sort of “Good Driver” or “Safe Driver” discount program for preferred drivers.

Many companies also have certain prerequisites for being labeled as a preferred risk driver. Some car insurance companies bar anyone under the age of 25 due to statistically risky behavior many under 25 drivers exhibit and also because younger drivers tend to be less experienced on the road.

This goes for people who have not had licenses for more than 5 years as well, regardless of age.

Your median credit score can also affect whether or not you are classified as a preferred risk, but this is often used when the company is on the fence about letting you on the discount program.

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How much can you save on car insurance as a preferred risk driver?

The benefits of being a preferred driver are numerous. Since preferred risk drivers are car insurance customers that tend to be very profitable for insurers due to the fact that they rarely file claims, companies will fight to get your business.

Not only do most car insurance companies offer existing policyholders deep discounts for being a preferred driver, other companies often try to poach these profitable customers and this can lead to even deeper discounts when switching car insurance providers.

Also, if you own any other insurance policies, like homeowners, life, boat or another vehicle, you can often use your status as a preferred driver to lower the prices of your other policies since you have already been proven to be a responsible customer.e

You must have an almost spotless driving record, with many companies this is defined as no more than 1-3 moving violations in the past 3-7 years as well as absolutely no charges for driving under the influence.

How do I improve my risk status and become a preferred risk driver?

If you want to improve your chances of receiving a preferred driver discount you should do the following. Make sure your credit score is at or above the median credit score for your area.

Companies use your credit score to gauge how responsible you are. In their minds, if you are responsible enough to stay within your means and pay your bills you will probably be a responsible driver.

You can also take a safe driving or defensive driving class often offered at your local Department of Licensing or Motor Vehicles, and sometimes at police stations. Many car insurance companies will take this as a sign that you wish to improve your driving skills and decrease your chances of being a risky driver.

Preferred risk drivers receive the best treatment from car insurance companies including substantial discounts on auto insurance premiums, however, this doesn’t mean you will automatically get the best car insurance rates available.

Much like shopping for anything else the only way to find the best car insurance rates is to compare companies. Even as a preferred risk driver it’s not uncommon to overpay up to $500 or more annually by not shopping around.

Car insurance companies are highly competitive and even the best drivers need to compare coverage and quotes in the marketplace.

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