Building Auto Insurance History: Strategies For New Drivers

Building a solid auto insurance history is vital to accessing the best coverage options for your unique insurance needs. While it may seem daunting, there are several ways to start and improve your auto insurance history. One way is to be listed as a driver on your parents' auto insurance policy if you are still living with them. Another option is to get non-owner car insurance, which is typically cheaper than regular auto insurance and counts towards being continuously insured. Maintaining a clean driving record and good credit score will also result in better rates. Additionally, taking risk management courses, such as beginner driver education courses, can help reduce your premium by demonstrating safe driving practices. By taking these steps, you can build a strong auto insurance history and gain access to more coverage options and preferred premiums.

Get non-owner auto insurance

If you don't own a car, you can still get non-owner car insurance to build your insurance history. Non-owner car insurance is a good option if you don't own a vehicle but regularly borrow or rent other people's cars. It's also useful if you need to file an SR-22 or FR-44 form with your state, which may be required to reinstate your driver's license after a serious conviction like a DUI.

Non-owner car insurance provides liability coverage for bodily injury and property damage resulting from an accident where you are at fault. It covers medical expenses for injured parties and repair bills for damaged property, such as another vehicle or a fence. It also provides legal defence in case you are sued for causing a car accident. However, it does not cover damage to the car you are driving or your own injuries after an accident.

Non-owner car insurance is typically cheaper than standard car insurance. It's a good option if you:

• Borrow cars often
• Use a car-sharing service
• Rent cars frequently
• Want to maintain continuous coverage to avoid higher rates
• Are required to file an SR-22 or FR-44 form

However, if you only borrow or rent cars occasionally, or if the car you're driving is owned by someone in your household, you may not need non-owner car insurance.

To get a quote for non-owner car insurance, you usually need to call an insurance company or agent, as online quotes are not always available. The cost will depend on factors such as your age, driving history, location, and desired coverage limits.

Maintain a clean driving record

Maintaining a clean driving record is essential for keeping auto insurance costs low and demonstrating that you are a safe and responsible driver. A clean driving record is a Motor Vehicle Record (MVR) without any violations, at-fault accidents, traffic-related convictions, or points during a specified time. The duration for achieving a clean driving record varies, depending on the state and the purpose of the record check. For instance, insurance companies typically review the past three years of driving records, while certain employers might disqualify candidates with a DUI from the last seven years.

• Practice good driving habits: Prioritize safe driving to avoid accidents and moving violations. Being a cautious driver is the best way to maintain a clean record and prevent insurance premiums from increasing.
• Take driving courses: Consider enrolling in defensive driving or risk management courses, especially if you are a new driver. These courses can provide valuable knowledge about safe and defensive driving practices, potentially reducing your insurance premium.
• Keep track of your record: Regularly check your driving record through your state's DMV to identify any errors or issues. If you find any inaccuracies, file a dispute with the appropriate state department. Additionally, keep track of when offenses fall off your record, and shop around for new insurance quotes once your record improves.
• Understand the impact of violations: Minor violations, such as speeding tickets, are generally viewed less severely by insurance companies and employers. However, multiple infractions or serious convictions, like a DUI, can significantly affect your insurance rates and driving privileges.
• Maintain continuous insurance: Insurance companies offer discounts and incentives to drivers with uninterrupted insurance histories. Even if you don't own a car, consider purchasing a non-owner auto policy, which is typically cheaper and counts towards being continuously insured.

Take risk management courses

Taking risk management courses is a great way to build a positive auto insurance history, especially for young people who are just starting out. These courses can help to reduce your risk profile and signal to insurance providers that you are a responsible and low-risk driver.

Risk management courses can provide you with valuable knowledge about safe and defensive driving practices, which can help you maintain a clean driving record and reduce the likelihood of accidents. This is particularly beneficial for new and inexperienced drivers who are more likely to engage in unsafe behaviours. By taking a beginner driver education course, you may even be able to get a reduction on your insurance premium.

When choosing a risk management course, it is important to consult with your insurance broker beforehand. They can advise you on which courses are recognised by insurance providers and will have the most positive impact on your insurance history.

There are a variety of risk management courses available, ranging from self-paced online courses to in-person educational programmes. These courses can cover a range of topics, including:

• The basics of risk management and insurance, including the financial consequences of risk exposure and how insurance offers protection.
• The structure of the insurance market and how the industry is regulated.
• Practical applications and theories from the industry, as well as the role of insurance as a risk management solution.
• Techniques for individual and enterprise risk management, such as risk control and financing techniques.

By investing in risk management education, you can not only improve your driving skills and reduce your risk profile but also make more informed decisions about your auto insurance.

Get listed as a driver on your parents' policy

If you're a new driver, one of the best ways to build your auto insurance history is to get listed as a driver on your parents' policy. This is a great way to start building your insurance history, and it's helpful if you live with your parents and are still dependent on them. Being included as a listed driver counts towards your insurance history, even though you're not the policyholder. This is also a cost-effective option, as it's much cheaper than getting your own separate policy as a young driver.

If you're under the age of 25, staying on your parents' insurance policy will be significantly more affordable than buying a policy on your own. The rates for young drivers buying a policy independently are much higher than average because insurance providers consider them high-risk due to their lack of driving experience. By staying on your parents' policy, you can benefit from their established insurance history and lower rates.

It's important to note that, while there is usually no age limit for staying on your parents' car insurance policy, there are other factors that determine when you should get your own policy. For example, if you move out of your parents' house and establish your own residence, you will likely need to purchase your own insurance policy. Similarly, if you buy your own car, you may need to insure it separately, depending on the state you live in and the insurance company's requirements.

Another advantage of being listed on your parents' policy is that you can help lower their annual premiums. Many insurance companies offer student discounts, and as a young driver, you may qualify for good student discounts or safe driving discounts. Maintaining a clean driving record and taking a driver's education course can also help reduce their premiums.

It's also worth mentioning that, as a listed driver on your parents' policy, you are covered when driving their vehicles. This means that if you occasionally drive one of their cars, you don't have to worry about separate insurance or the risks of driving uninsured. However, it's essential to ensure that all drivers sharing the same permanent residence are listed on the policy to avoid any legal or financial issues in case of an accident.

Keep your insurance history uninterrupted

Keeping your insurance history uninterrupted is an important factor in building a strong auto insurance history. Here are some key reasons why you should maintain an uninterrupted insurance history:

Demonstrate Low Risk

An uninterrupted insurance history signals to insurance providers that you are a low-risk client. This is because maintaining continuous insurance coverage shows that you are responsible and understand the value of insurance across different areas of your life, such as home, auto, business, and lifestyle. This can lead to insurance providers offering you better rates and more coverage options.

Access to More Coverage Options

A strong and uninterrupted insurance history gives you access to a wider range of coverage options from a variety of insurance providers. Each insurance policy is unique, and an extensive insurance history demonstrates your understanding of the importance of adequate financial protection. As a result, more insurance carriers will be willing to offer you coverage, and you may also be able to obtain higher limits on your policy if needed.

Lower Premiums

Insurance providers are more likely to offer incentives to customers with uninterrupted insurance histories, such as preferred premiums and basic insurance discounts. This is because they assess you as a low-risk client who is less likely to file frequent or costly claims. By maintaining continuous insurance coverage, you demonstrate that you are a cautious and responsible individual, which can lead to significant cost savings over time.

Smooth Transition During Life Changes

Life often presents unexpected challenges and changes, such as moving, getting married, or having children. During these transitions, having a solid insurance history can provide peace of mind. You won't have to worry about finding the right insurance coverage to meet your changing needs, as your uninterrupted insurance history will make it easier to adjust your coverage accordingly.

Avoid Negative Impact on Insurance History

Unexplained or unjustified gaps in your insurance history can signal to insurance companies that you are a higher-risk client. This may lead to higher premiums or even a decline in insurance coverage. By maintaining uninterrupted insurance coverage, you can avoid these potential negative consequences and continue building a positive insurance history.

Frequently asked questions