Drunk and unsafe driving habits can not only spike accidents on the road but also your insurance premiums. Reports suggest that in India, more than 480,000 road accidents happen every year. So, how are bike and car insurance companies taking this, and what is its impact on you? Keep reading to know more about it!
What Negative Driving Habits Impact Insurance Premiums?
Negative driving habits in India are easy to form, as unreported cases of road traffic violations are high. On average, much less than half of Indian drivers wear a helmet while driving as of 2024. Thus, multiple negative habits can impact your car and bike insurance premiums, and these include:
1. Traffic violations
2. Reckless or rash driving
3. Driving under the influence
4. Using a mobile phone while driving
5. Frequency of accidents
6. Frequent claims
7. Late payment of challans/fines
2 Ways Negative Driving Habits Impact Car and Bike Insurance Premiums
1. Increased Risk Perception
There is a term ‘personal risk perception’ which refers to your view in the eyes of a potential insurer regarding the coverage offering.
An individual with high personal risk perception is unlikely to be considered for insurance. This is because it will directly impact the insurer’s future spending on approving claims.
A driver with bad driving habits will be associated with high risk and possibly higher claims in future. Thus, insurers tend to charge these drivers higher premiums while giving out car or bike insurance.
2. Potential for Costly Claims
With an increase in the number of claims made, the potential for costlier claims also increases with high-risk policyholders.
For instance, a person has a habit of rash driving. They tend to get into minor accidents frequently. Moreover, this rash driving habit also harms the brakes, transmission, engine, and tires of their car. This eventually leads to frequent vehicle issues and higher charges for part replacements.
For the driver, this means that their claim approval rate might be very low due to costly and frequent claims.
What Positive Driving Habits Impact Insurance Premiums?
One can develop good driving habits such as:
1. Clean Driving Record
2. No Claim Bonus (NCB)
3. Low Mileage
4. Safe Driving Record
4 Ways Positive Driving Habits Impact Car and Bike Insurance Premiums
1. Easier to Get Insurance
Positive driving habits lead to a lower risk perception. This makes it easier to get insurance at a discount with any insurer.
You get multiple comparison options to analyse and cross-examine whether an insurance policy is meeting your needs. This leads you to save money and get the best car or bike insurance possible for yourself.
2. Discounts through No Claim Bonus (NCB)
The way that an NCB works is that you get a fixed discount on each renewal of your insurance policy. This again helps you save a lot on your premiums. The table below shows the fixed rate according to which you get discounts on your insurance premium amount:
| Claim-free Renewals | Discount on Premium |
| After the first year | 20% |
| After the second year | 25% |
| After the third year | 35% |
| After the fourth year | 45% |
| After the fifth year | 50% |
3. Higher Chances of Claim Approval
Being a lower-risk perception driver, you would generally tend to make fewer claims. This will create a positive impact on your profile as a policyholder. Thus, your insurers will be more likely to approve your claim.
4. Lower Insurance Premium
An insurance company provides a lower premium when buying a new insurance policy for a low-risk driver. Thus, developing positive driving habits can help you in financial savings from the beginning while getting insured.
Emergence of Usage-Based Insurance
In several countries, insurers use a driver’s risk profile as a key factor in calculating car insurance costs. In India, this risk-based insurance is still developing. Some motor insurance companies are now adopting technologies such as:
- Telematics
- Artificial Intelligence (AI)
- Internet of Things (IoT)
They have done this to offer fairer and more accurate pricing on car insurance plans for their customers. This shift is driving the growth of usage-based insurance (UBI), where insurers link the premium directly to how the customer uses the insured vehicle.
Bottom Line
Poor driving habits can increase your insurance premium and may even make it difficult to get coverage in the future. Insurers view risky behaviour, like speeding, harsh braking, or frequent claims, as red flags. On the other hand, practising safe and responsible driving not only keeps you secure on the road but also helps lower your insurance costs over time. It can also make the claim process quicker and smoother.
In short, clean driving is not just good for your safety but also your wallet. Drive responsibly to enjoy better insurance benefits and long-term savings.
