Preferred Auto

Published: | Updated: January 16, 2017

Definition - What does Preferred Auto mean?

Preferred auto is a type of auto insurance that insurers only offer to drivers who have had no, or at least very few, accidents. It is called "preferred auto" because drivers who get this type of insurance are "preferred" by auto insurance companies. These favored policyholders typically pay the lowest premiums of any policyholder category that the insurance company offers.

Insuranceopedia explains Preferred Auto

Any driver who has a low risk of filing a claim is desirable for insurance companies. Drivers who wish to become eligible for preferred auto insurance can help their chances by following traffic laws, driving responsibly, and avoiding accidents. On the other end of the spectrum, drivers who get into a lot of accidents can be charged higher premiums for auto insurance. Since they represent a higher risk, they are likely to be more costly for insurance companies in the long run.

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