Auto insurance companies prefer safe drivers, and they will make insurance very attractive to them as a way to lure the best drivers. Safe drivers result in fewer claims, which allows the insurance company to profit by collecting premiums without paying claims. The less likely a driver is to get into an accident, the less their car insurance will cost.

Driving safely isn’t just a good way to save money on car insurance, of course. Auto accidents can be serious, and they’re a leading cause of death for young people; by doing your best to avoid an accident, you can prevent serious injuries, expensive lawsuits and possibly even premature death. Safe drivers are also less likely to earn traffic citations and speeding tickets, which will save money and legal trouble.

If you’re a safe driver, you should be rewarded for your habits. Some of the ways that insurance companies reduce their rates for safe drivers are:

Reduced Premiums

The first and most obvious way that insurance companies provide and incentive to good drivers is through the cost of the base rate itself. Whenever a driver obtains a quote from an insurance company, they will calculate the premiums based on multiple factors. This process, called underwriting, assesses a driver’s overall risk based on their age, gender, driving history, geographic location, type of vehicle and other factors. Drivers who are found to be lower risk will get the lowest premiums, while those with a higher risk will have higher premiums in order to compensate for potential claims.

The exact calculations behind rate determinations vary from one company to the next, and underwriting is usually completed by a computer algorithm so it may be impossible to know exactly how the rates are calculated. Nevertheless, driving history plays a large role in determining the cost of premiums, and the best drivers will pay similarly low rates from one company to the next despite any additional discounts that might be offered.

Deductible Reduction Programs

Some insurance companies take safe driving discounts further. In addition to reducing the overall cost of insurance, they will also lower the amount of a driver’s deductible. Allstate pioneered this program, but other insurers like Nationwide are providing similar programs. The way these “vanishing deductible” programs work is simple: For each year of safe driving, the driver’s deductible is reduced. If they do get into an accident, the deductible will reset and must be reduced through further years of safe driving.

The deductible reduction is not offered with all policies; you must ask for it specifically, and it may cost you slightly more to add it. It’s up to you to decide whether it’s worth paying a little extra to enroll in the program. Although safe drivers may never need to use their insurance, having a reduced deductible is very useful in situations where an accident is unavoidable.

Rewards Checks

Some insurance companies offer annual or semi-annual checks to their customers to represent the money that they’ve saved by driving safely. Depending on the company, this could be equal to a free month of premiums or it might correspond with the amount of a discount put against the policy. Either way, the reward will be deposited into the insured’s bank account, mailed as a check or applied to the insurance policy’s balance.

Car insurance companies don’t always advertise these checks, so you may be pleasantly surprised around the end of the policy term. On the other hand, some companies do advertise these rewards but apply them directly to the policy, so you may be expecting a check that never arrives. Be sure to check with your insurance company to see which way your policy will be handled.

Pay-As-You-Go Policies

Progressive was the first insurer to offer this type of program, but other insurance companies have started offering something similar. Pay-as-you-go auto insurance charges you only for the miles that you drive, and it bases rates off of real driving behaviors rather than purely statistical information.

In order to enroll in this type of program, you will need to ask your insurance company for a device to be installed in your vehicle. This device will calculate your mileage and certain habits such as speed of acceleration and braking; it will then report these figures back to the insurance company, which will alter the cost of premiums accordingly. Because rates are calculated based on real driving behavior, your premiums will change from one month to the next, but you can reduce the cost of your insurance in real-time this way by modifying your behavior.

For some drivers, a pay-as-you-go policy is the best possible way to reduce the cost of insurance. For others, they may actually pay more for this type of coverage than they normally would. If you’re interested in this type of program, you should contact your insurance company to see if they offer something similar and get an idea of how much it would cost to obtain.

No matter what type of discount you receive, your safe driving should always be rewarded by the insurance company. Be sure to ask your insurer if there are any discounts you can qualify for. If you feel that you’re over-paying for auto insurance, you can begin searching for a new company that will provide you with the rates that you deserve; it will be very easy for a good driver to find a new insurer with lower premiums.