Preferred auto insurance

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Being a good driver comes with its perks. If you have a perfect driving history with no tickets, accidents or other traffic incidents, you fall into the lowest risk profile for insurance companies and may be eligible for lower rates and even more discounts. Drivers who present with a clean driving record or who are perceived to be low-risk may qualify for preferred auto insurance, which is a type of policy offered only to those who fall into the lowest risk group.

It is not uncommon for most drivers to have one or two incidents on their driving record, whether it is a speeding ticket or a fender bender. But these incidents can have a negative impact on the rate of premiums. If you have maintained a spotless driving history, you may benefit from savings on insurance premiums, as well as be able to enjoy a variety of discounts and other benefits, including preferred automotive insurance.

What is preferred auto insurance?

Preferred auto insurance is the type of insurance that is offered to drivers who are considered to be the lowest risk and are, therefore, considered to be least likely to file an insurance claim. Insurance is all about assessing risk and customers who are perceived to be in the lowest risk profile get the best rate on premiums, compared to those who are considered average or high risk. This is estimated by taking into account driving behaviours, age, credit score (in most states) and the type of vehicle you drive. Those who qualify for preferred auto insurance generally have years of solid driving experience, no traffic incidents, good credit score and low annual mileage.

Aside from the above, you also need to have a good insurance history to be eligible for preferred auto insurance. This includes regular timely payments, no policy lapses and no claims history.

Preferred vs. standard

Auto insurance customers are usually classified into three categories: preferred, standard and nonstandard.

  • Preferred insurance is for low-risk drivers with excellent credit and spotless driving histories who are perceived as being the least likely to file an insurance claim which allows them to enjoy lower insurance premiums.
  • Standard insurance is offered to drivers who are considered an “average” risk. That is to say that they are still low-risk but may have only good credit (instead of excellent) and no pattern or history of serious violation allowing them to pay average rates for car insurance.
  • Nonstandard insurance is reserved for drivers who are considered to be high-risk and, therefore, more likely to file an insurance claim and end up costing the insurance company money. Nonstandard insurance may apply if you have ever been denied coverage or issues a non-renewal. Additionally, it may apply if you are under 25, have poor credit, or have a spotty driving record.

While coverage might remain the same in preferred automotive insurance, the rates could be much lower than standard insurance and there may be more ways to save. Keep in mind that you will become ineligible for preferred auto insurance if your driving record gets worse.

How do I get preferred auto insurance?

You will only be able to receive preferred auto insurance if the insurance company is able to classify you as a low-risk driver during the underwriting process. To qualify for top tier auto insurance, you will need to have an excellent driving record, preferably with no traffic incidents. Insurers will also check if you live in a region with a low crime rate and whether or not you have a strong credit score (in most states). Past insurance records, such as coverage lapses and payment history are also considered.

Age is also a big factor in being a preferred customer. You need to be above 25 but under 70 years of age to be considered part of the low risk group.

Anyone who has a history of DUIs or serious traffic violations, like reckless driving, will not qualify for preferred auto insurance. Additionally, if you’ve ever needed an SR-22 to drive and get insurance, you will most likely not be able to get preferred auto insurance.

Can I improve my driving record to get preferred auto insurance?

This may be possible if you avoid new incidents or claims in your driving history. Ideally, you will start with a clean driving history and keep it that way, as you will have to have an insurance policy for a few years before you qualify for preferred insurance – but it is possible to eventually improve your driving record enough that you end up qualifying.

Additionally, you can make changes such as improving your credit score, moving to a lower-risk, city or neighborhood, taking public transportation to help you drive more infrequently and making all premium payments on time. This will help decrease your perceived risk factor when you renew your auto insurance policy.

Being a good driver will also come with the perk of potentially qualifying you for more discounts and cheaper rates.

Frequently asked questions

Can everyone qualify for preferred auto insurance?

The very top tier of car insurance is for the lowest risk customers. This involves having an impeccable driving record with practically no incidents, a strong credit score, a safe, low-crime location, favorable coverage and payment record and low annual mileage. Anyone with all of these qualities may qualify for preferred auto insurance.

Is credit score important for preferred auto insurance?

Your credit score helps insurers determine if you are going to be regular with payments. For preferred auto insurance, a good credit score means lower risk, and is an important factor for insurance companies. Keep in mind, credit is not allowed to be used as a rating factor in California, Hawaii, Massachusetts, Michigan and Washington.

What are the benefits of preferred auto insurance?

Preferred auto insurance means lower premiums. Additionally, possessing the characteristics that put you in the preferred auto insurance category are some of the same characteristics that may qualify you for additional discounts. For example, having a spotless driving record is important when qualifying for preferred auto insurance, but you may also be eligible for a claims-free discount.

Written by
Cynthia Widmayer
Insurance Contributor
Cynthia Widmayer has over two years of experience as an insurance and personal finance writer. She covers home, car and life insurance products for Bankrate, the Simple Dollar, and Coverage.com, among others.
Edited by
Insurance Editor