Driver Knowledge Tests

How your driving behaviour directly affects your insurance premiums

When learning to drive, you have a lot of information and skills to become accustomed to. However, some of that information has little to do with driving itself. Rather, you are going to need to know about seemingly external issues, including insurance.

Insurance can seem more complicated than other car-related matters. There are different types of insurance, and they are not all for your benefit. In fact, you are going to need to ensure that you are insured for the vehicle you plan on driving, even if you don’t own the car. This is because if you are in an accident where you at judged as ‘at fault’, then you will be liable to pay a proportion of the financial restitution, which could include mitigating property damage, medical bills and more.

You can learn everything you need to know about the types of car insurance from this article.

The price of insurance premiums is a mystery to many people, especially those new to driving. There is no set cost of car insurance, and the premiums you are given will actually be specific to you. Some of the considerations taken into account are how old you are and how long you have been driving.

But these days, how you drive also affects your premiums. There are two ways this works.

Driving history

The traditional way a person’s driving influences their premiums is through their driving history. Insurance companies have always looked at any prior collisions and subsequent claims, including the details of who was responsible.

For new drivers, the history of drivers their own age has influenced premiums. In other words, because young adults are more likely to cause collisions, premiums are more expensive even for young drivers who have an exemplary driving record or have never driven before.

However, in today’s world, insurance companies have come a long way in using driver behaviour to determine premiums. This is because technology allows them to track your driving behaviour.

Driving behaviour (a sliding scale)

Many insurance companies today offer premiums on a sliding scale. This means that they give you a basic premium which can increase or decrease based on how you drive. You give them permission to use technology, called telematics, that tracks your driving in your car. They take into account how heavily you brake, your rev count, and other factors that indicate the safety of your driving.

At the end of each month, they then adjust your premium. For drivers who are not careful in their behaviour, this can lead to higher premiums than they would have paid historically. However, for those who drive safely, this can lead to significant savings, especially if they are otherwise classed in a group that is considered high risk.

People who like to push their cars to the limits – enjoying the speed at which they are able to reach 100 kilometers per hour or the sound their car makes when they floor the accelerator – will have to face the consequences and pay extra.

But for the most part, the technology makes the process of calculating premiums far fairer. We can all agree that past behaviour is not always indicative of future actions. People change over time, especially if they have had to face the consequences of the actions which led to a collision.

Are fixed premiums possible?

There are insurance companies who do not use telematics to provide discounts. If you do not plan on changing your driving behaviour, you may prefer their fixed premiums, or simply not opt in to the systems used by your insurance provider. If you are concerned about privacy, this may also be your preferred option.

However, the benefits of behaviour-based premiums go beyond discounts. They also provide a material incentive to improve your driving. Most people want to drive safely, but we all get complacent. The impact your driving has on your insurance premium keeps you from getting complacent, as you will feel the consequences of that complacency.

These days, your premiums are not solely based on driving history that does not necessarily reflect how you drive now. Rather, your driving behaviour directly impacts how much you pay at the end of each month, regardless of what may have happened in the past.

Darren is an expert on driving and transport, and is a member of the Institute of Advanced Motorists

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