These days, most car insurance companies offer a variety of discounts to keep their rates competitive. Having everything from good grades to an electric car can save you a little bit of money every month.
But here in California, there is one discount that reigns supreme — the Good Driver Discount.
What is the California Good Driver Discount?
Back in 1988, California residents voted Proposition 103 into law. Among other insurance-related regulations, Proposition 103 also created the Good Driver Discount — which requires car insurance companies to give qualifying policyholders a 20% discount.
How do you qualify for the California Good Driver Discount?
First and foremost, you must have been licensed to drive (either here in California or anywhere else in the U.S. or Canada) for the past three years. And, during those three years, you must not have:
- Been at-fault (meaning at least 51% responsible) in an accident
- Received more than one point on your driving record
- Gone to traffic school for more than once for a traffic violation
However, there is a slight loophole when it comes to motorcycles. According to the language in Proposition 103, if you’re looking for motorcycle coverage, you must have been licensed to drive a motorcycle for the past three years in order to receive the Good Driver Discount. If you simply had a “regular” driver’s license during that time, your insurance company isn’t required to give you the discount.
How much money are California drivers saving?
In November 2013 — the 25th anniversary of Proposition 103 — the Consumer Federation of America decided to find out. Their research showed that California drivers had saved more than $100 billion in those 25 years, solely because of Proposition 103.
By graphing their data we can actually see that California’s average car insurance premium have decreased 14.3% since Proposition 103 went into effect. During that same time period, the national car insurance rate average jumped 50%. Before Proposition 103, California’s car insurance rates were rising faster than any other state in the nation.
Do you have to tell your insurance company to give you this discount?
No. As long as you meet these qualifications, you will automatically receive a 20% discount on the car insurance premiums that you would have paid otherwise, for the same exact coverage. Every insurance company that operates in California is required to give you this discount if you qualify for it, so you don’t have to worry about making any formal requests for it or being limited to certain companies in your search for a policy.
Can the insurance companies just raise their rates to offset the 20% discount they’re forced to give you?
No. Proposition 103 also made it illegal for California car insurance companies to change their rates without getting the California Department of Insurance’s approval first. The state has actually denied more than $23 billion in insurance rate increases since Proposition 103 went into effect.
How long can you receive the Good Driver Discount?
For as long as you qualify for it! Aside from saving you money, the discount is intended to make California drivers more aware of their driving habits, which ultimately makes the state’s roads safer. Once you violate the requirements, you’ll lose your discount.
Does it matter how old you are?
No. As long as you’ve met these qualifications for the past three years, you’ll receive the discount. As a result, a 19-year-old could end up with lower premiums than someone who’s in their 40’s or 50’s, even though drivers between the ages of 16 and 24 typically pay the highest premiums.
What about DUIs? Can you receive the Good Driver Discount if you’ve ever gotten one?
If you’ve ever been convicted of DUI, you will have to wait 10 years from the date of the violation before you’re eligible for the Good Driver Discount. Even if you meet all of the other requirements that we’ve talked about, your DUI conviction will prevent you from qualifying.
If you’re currently benefiting from the Good Driver Discount and you get convicted of DUI, you won’t lose your discount right away. California law forbids insurance companies from making any rate changes during the policy’s term. Instead, they have to wait for your current policy term to end before they can charge you more.
What if you’re about to qualify for it?
If you don’t qualify for the Good Driver Discount now — but will in a few months — you may want to hold off buying a new policy. Remember, your rates can’t change mid-policy, so if you’re going to reach that three year “clean” threshold in seven months, don’t go get a 12 month policy now. If you do, you’ll wind up paying 20% more in premiums for five months when you don’t have to!
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