Question

What is the required rate discount under a Good Driver Discount policy?

1.
20% below the rate the insured would have been otherwise charged for the same coverage.
2.
10% below the rate the insured would have been otherwise charged for the same coverage.
3.
20% below the insurer's average premium rate.
4.
10% below the insurer's average premium rate.

Answer 1

The Good Driver Discount rate varies by company and jurisdiction, but generally, it ranges from 10% to 20%. The exact discount an insured driver receives would depend on the insurer's policy.

Step-by-step explanation:

The question relates to the amount of discount an insured driver is entitled to under a Good Driver Discount policy. Insurance companies often implement risk-based pricing, where individuals are grouped based on the expected losses or claims that they might have. Drivers in the lowest risk group would generally cause less damage and therefore would be eligible for lower premiums, reflecting the insurance concept of being 'actuarially fair.' Furthermore, to incentivize safe driving, insurance companies may also offer a Good Driver Discount to those who meet certain criteria.

Without specifics, it is hard to determine the exact rate of discount provided under such policies as it varies by company and jurisdiction. Generally, discounts might range from 10% to 20%. However, it's essential to review the terms and conditions of a particular policy or consult with the insurance company to get the precise discount rate offered for being a good driver.