Personal Finance

Why You Should Take A Defensive Driving Course in 2017

Moments away from signing a contract

Car insurance companies really like safe drivers; they are less likely to get into an accident, and therefore less likely to cost them money through settling claims. Unsurprisingly, then, of all the car insurance discounts you can use to reduce your auto-insurance premium, the most universal may be a rate reduction in exchange for taking a course on safe driving, which is often titled a “defensive driving” course.

What’s required is relatively painless, and the benefits reasonably generous. You pay a modest fee--typically $25 or so--and take an online course that you complete, usually at your own pace, in about six hours. (You can usually find a list of approved class providers somewhere on your state’s DMV website. You may have to sign up with one of the approved class providers listed there in order to be eligible.)

The courses include questions and resources about how to be a more effective defensive driver on the road. Essentially you are retaught how to take less risks when you’re driving. Upon completion, depending on the state in which you’re licensed (and, in some states, on your insurance company as well), your premium is typically reduced between 5% and 10% for two to three years.

However, like most insurance discounts, there are exclusions and caveats to discounts from completing a safe-driving course. Here’s a rundown of what you need to know.

In Some States, Only Senior Drivers Are Eligible

In many states, including New York, Florida, Virginia, and Kansas, drivers of all ages can take a defensive driving class and realize a discount on their premium. However, if you live in California, Florida, Pennsylvania, Washington, Tennessee, Minnesota, or Nevada, you won't be able to qualify for a discount unless you are at least 55. (Consequently, in these states the course may be called a “Mature Driver Improvement Course.)

If your state isn’t cited above, you should find eligibility information on your state’s DMV site. Most states will reward in some way or form for the completion of a safe driving course however. One further caveat: The residence determinant of eligibility typically isn’t where you currently live but the state in which your driver’s license was issued.

Discounts Vary By State

States reward drivers with differing discounts in terms of both rates and the parts of the of policy to which the discount is applied.

Florida is among the states in which discounts are the broadest and most generous. Any driver who completes a Basic Driver Improvement course is entitled to up to 10% discount on their total car insurance rates.

In at least two other states, New York and Minnesota, the state government mandates at least a 10% discount. In New York, though, coverage applies only to the liability (BI and PD), PIP, and Collision coverage premiums. (However, considering that BI, PIP and Collision coverage are some of the costliest portions of your total policy premium, a 10% reduction on each of them can represent a significant savings.) And in Minnesota, eligibility is limited to drivers who are 55+. Some companies within those states can, and do, offer deeper discounts than the required 10% minimum rate. Pennsylvania’s senior drivers (alone) are entitled to a 5% discount.

If your state isn’t cited above, you should find information on discounts on your state’s DMV site.

These discounts can add up to a hefty savings, especially given the multiple years in which they’re in effect. For example, a sample driver we used would have an average premium of $1,152 a year in Minnesota, meaning he or she would realize at least a $115 drop in their insurance bill with the discount. In most cases, your insurer will have to honor this discount continuously for at least 2 - 3 years, so the total savings could run as high as $345. Considering the class only costs $25, you would see a huge return on investment. When it expires, you just need to take a renewal class and you will be eligible for the discount again for another 2 - 3 years.

Bad Drivers May Not Qualify

You may also need to be--and stay--accident free in order to keep your discount. In other words, if you cause an accident that resulted in claims while your discount was effective, your insurer has the power to cancel your savings early despite the law. Another reason could be due to a conflict of benefit. As an example, in most of these states a court may require a driver who has been convicted of traffic violations to take a defensive driving class as a penalty. In this case, your defensive driving class credit cannot be used again towards insurance discount.

The article Why You Should Take a Defensive Driving Course in 2017 originally appeared on ValuePenguin.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.