Calculating the New Annual Premium

Oct 13, 2025 by recoveryshake.com 64 views

**After Reviewing Her Driving Record: A Good Driver Discount**

What is a Good Driver Discount?

A good driver discount is a reduction in insurance premiums offered to drivers who have a clean driving record, typically with no accidents or traffic violations. This discount is usually applied to the driver's annual premium and can vary depending on the insurance company and the driver's location.

How Does a Good Driver Discount Work?

To qualify for a good driver discount, drivers must meet certain criteria, such as:

Having a clean driving record for a specified period (e.g., 3 years)
Not having any accidents or traffic violations during the specified period
Not having any claims filed against their policy during the specified period

If a driver meets these criteria, their insurance company may offer a good driver discount, which can range from 4% to 30% off their annual premium.

Calculating the New Annual Premium

Cindy's original policy premiums are listed below:

Coverage	Original Premium
Liability	$1,200
Collision	$800
Comprehensive	$600
Total	$2,600

Cindy's insurance company offers her a good driver discount of 4.5%. To calculate her new annual premium, we need to multiply the original premium by the discount percentage.

Step 1: Convert the Discount Percentage to a Decimal

To calculate the discount, we need to convert the percentage to a decimal by dividing by 100.

4.5% = 4.5 ÷ 100 = 0.045

Step 2: Multiply the Original Premium by the Discount Decimal

Now, we multiply the original premium by the discount decimal to get the discount amount.

Discount Amount = Original Premium x Discount Decimal = $2,600 x 0.045 = $117

Step 3: Subtract the Discount Amount from the Original Premium

Finally, we subtract the discount amount from the original premium to get the new annual premium.

New Annual Premium = Original Premium - Discount Amount = $2,600 - $117 = $2,483

Q&A

Q: What is a good driver discount? A: A good driver discount is a reduction in insurance premiums offered to drivers who have a clean driving record.

Q: How does a good driver discount work? A: To qualify for a good driver discount, drivers must meet certain criteria, such as having a clean driving record for a specified period and not having any accidents or traffic violations.

Q: How is the new annual premium calculated? A: The new annual premium is calculated by multiplying the original premium by the discount decimal and then subtracting the discount amount from the original premium.

Q: What is the new annual premium for Cindy? A: The new annual premium for Cindy is $2,483.

Q: What percentage of the original premium is the good driver discount? A: The good driver discount is 4.5% of the original premium.

Q: How much is the discount amount? A: The discount amount is $117.

Q: What is the original premium? A: The original premium is $2,600.

Q: What is the liability premium? A: The liability premium is $1,200.

Q: What is the collision premium? A: The collision premium is $800.

Q: What is the comprehensive premium? A: The comprehensive premium is $600.

Q: What is the total premium? A: The total premium is $2,600.