Accident free: A highly prized car insurance discount

Neil Bartlett

If you’re looking to save money on your car insurance policy, a great start would be to stay accident-free. If you stay accident-free for long enough, you could receive a healthy discount, depending on your insurer and your location.

“Accident-free discounts are the ‘holy grail’ for good drivers,” says Loretta Worters, a spokeswoman for the nonprofit Insurance Information Institute. “It’s recognition that you’re a safe driver. Accident-free typically means you’re free of at-fault accidents and major violations for at least five years.”

If you're "at fault" in an accident, this means you're the one who caused the crash.

Often, accident-free discounts are about 10 percent, but the amount varies from state to state and from insurer to insurer.

Good driver = valued customer

Simply put, an accident-free discount rewards anyone who's got a great driving record, says Steve Witmer, a spokesman with American Family Insurance in Wisconsin.

Check with your insurance agent or company to see whether you qualify for an accident-free discount. If your insurer offers an accident-free discount, it should be applied automatically. But experts say it doesn’t hurt to ask anyway.

According to Witmer, factors that dictate whether you'll get an accident-free discount include how long you’ve gone without an accident, how long you’ve been with your insurer, where you live, what other types of coverage you have with your insurance, and whether you've racked up any moving violations, such as speeding tickets.

State Farm offers a series of accident-free discounts. Typically, if a customer is insured with State Farm for three years and is accident-free, the discount is 15 percent. After six years, the accident-free discount rises to 20 percent. If you’re accident-free for 10 years, you’ll receive a 25 percent discount.

Nationwide Insurance offers up to a 10 percent discount for safe drivers who are free of at-fault accidents and major violations for five years. American Family offers different types of accident-free discounts, up to about 25 percent.

Shop around for a better deal

If you already receive an accident-free discount, is it ever worth it to look around and see whether you can score a bigger discount?

“It’s always a good idea to shop around,” Worters says. “Check with other insurers to see if they offer an accident-free discount.”

Witmer adds: “Customers who drive safely are more valued. They’re more profitable. Insurance companies are competing for your business.”

But before you shop, check in with your insurance agent or company. Many consumers who are in the accident-free category also have other discounts, such as a discount for having more than one policy with one insurer. Make sure you add up all of the discounts you get now before switching to another insurer; the move may not pay off.

If you still want to shop around, find out how long you need to be a policyholder with the new company before you can qualify for an accident-free discount. If you have a clean driving record, you carry some weight with a new insurer, Witmer says.

Avoiding accidents

Want to get on the road to being accident-free or to stay on that road? Keep in mind three of the major causes of car crashes.

1. Drinking and driving.

In 2010, more than 10,200 people died in drunk driving crashes in the U.S., and 345,000 were injured, according to the National Highway Traffic Safety Administration.

Drinking impairs your driving reflexes. It slows your reaction time, reduces your visibility at night and makes your brain work slower -- all of which make a crash more likely.

2. Distracted driving.

Distracted driving is a well-documented crash factor. A split second of inattention can cost you a lot. Talking on a cellphone while driving and texting driving are two of the most dangerous varieties of distracted driving. But they're not the only distractions. Changing radio stations, putting on makeup, yelling at your kids -- any of these can take your attention away from the road.

“When faced with any distraction, pull over and avoid a serious mishap,” Worters says.

3. Speeding.

In 2009, more than 10,000 deaths occurred in speed-related crashes across the country.

“Safe driving is good for you, your passengers and your pocketbook,” Witmer says.

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