11 things auto insurance companies don’t want you to know
Auto insurance can be confusing. First, there are all the policy considerations: do you want a comp and collision policy? What responsibility do you have to bear? Do you need uninsured motorist coverage? Even after you’ve made decisions on all of these things, the bill that comes in can be hard to figure out. What exactly goes into the pricing of your auto insurance premium? Here’s what auto insurance companies don’t want you to know about premium pricing.
Your auto insurance may not be tied to the driver.
The type of car you drive is important.
Previous inquiries and questions increase rates.
You can check your report for errors.
Your credit score has an impact on your auto insurance costs.
Where you live impacts your Premium Account.
Your age affects your auto insurance premium.
Gender, marital status, occupation and level of education can influence premiums.
If you bought your car with a loan, your premium may be higher.
You can lower your insurance premiums.
You have options if the insurance denies your claim.
Is auto insurance related to the car or the driver?
Technically, auto insurance is related to the car. This means that if you let someone else drive your car, your insurance can come into play in the event of an accident. However, not all insurance policies cover all uses of your vehicle, so read the fine print on yours before allowing someone else to drive it. You can also exclude the drivers who live with you from your policy if you never want them to drive your car and you don’t want them to affect the cost of your policy.
Does the type of car you drive matter?
The total value of your car, the type of vehicle it is, and the type of safety rating it has are all factored into the cost of your policy. Other factors can include how many miles you drive each year, where you park your car, and how many expensive extra features your car has.
Does your driving record affect your insurance?
Every claim you make, and even if you ask an insurance agent to make a claim, is entered into a database that your current and future insurers can access. If you’ve had recent accidents or traffic violations, you might be more expensive to insure than someone with a clean driving record. If you’ve made recent claims, your insurance premiums will likely increase. And if you’re shopping for a new business, they’ll have access to your records and consider your driving record.
Can you check your insurance reports?
Your insurance companies share information with two databases: the Comprehensive Loss Underwriting Exchange (CLUE) and the Automated Property Loss Underwriting System (A-PLUS). These databases are maintained by external agencies (LexisNexis runs CLUE and Verisk Analytics runs A-PLUS) and any complaints you make stay in your report for five to seven years, depending on the database.
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The Fair Credit Reporting Act entitles you to a free copy of your report every 12 months. You can dispute inaccurate or incomplete information on your report. You also have the right to be informed of any negative decisions based on the information in your report. Asking for your reports does not affect your credit score.
Request your LexisNexis CLUE report online or call 866-312-8076.
Request your A-PLUS report from Verisk by calling 800-627-3487.
Does your credit score impact the cost of your auto insurance?
In most states, your credit score can affect the cost of your auto insurance. The only states that don’t allow auto insurance companies to use credit score as a pricing factor are California, Massachusetts, and Hawaii. Statistical studies from the Federal Trade Commission and other research organizations show a correlation between credit score and how much a person is likely to cost an auto insurance company. In short, a person with a bad credit score is considered a higher risk, so the insurance company may charge more for the insurance to help cover expenses related to future claims.
Does where you live affect your premium amount?
Where you live can affect the cost of your auto insurance. In 2018, for example, the average auto insurance premium in Michigan was 64% higher than the national average. Louisiana, Florida, Rhode Island, and Connecticut are other states with high average auto insurance premiums. States with the cheapest average auto insurance premiums included Vermont, Ohio, Virginia, Idaho, and Iowa.
Does age affect your premium?
When it comes to what auto insurance companies don’t want you to know, this one’s no super secret. Age affects your premiums, with younger and older drivers generally paying the most on average.
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Younger drivers pay the most for insurance. Premiums are highest at age 18 and decrease steadily until the driver is 25. In the eyes of carriers, drivers then enter adulthood, during which premiums remain fairly stable for the next 30 years or so, up to age 55. slowly between 55 and 65 before jumping around the age of 75.
In addition to your age, gender, marital status, level of education and even your job can affect your insurance rates.
If you bought your car through a loan, is your insurance cost higher?
If you don’t fully own your vehicle, you could pay more to insure it. If you own a vehicle, you are only required to take responsibility for it. Third party liability is the part of your insurance policy that covers damage to the cars or property of others in an accident for which you are responsible.
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When you have a loan, the bank is concerned with protecting its investment. This means that you may also need to carry full coverage and collision. This is the part of an auto insurance policy that covers damage to your car in an accident in which you are at fault. A policy with this additional coverage is more expensive than without it.
How to reduce your auto insurance costs?
Regardless of your age, gender, or location, you can potentially reduce your auto insurance through a variety of methods. Here are some tips that your auto insurance company doesn’t want you to know about to save on premiums.
- Drive carefully. Not only does driving safely help you avoid accidents that lead to higher rates, but many companies also offer good premiums to drivers when you haven’t had an accident or filed a claim for a while.
- Pay your bills on time. Paying your bills on time goes a long way in improving your credit score, which can improve your rate depending on where you live. Paying your bills on time also demonstrates the reliability of your insurance company, which means you may be able to negotiate a lower rate.
- Ask for discounts. When it comes to your insurance rates, don’t be shy. Ask your insurance company about discounts, including multi-driver or multi-car discounts, good student discounts, or safe driver discounts. You may be able to get a large chunk of your bonus because you are a good student or obey all traffic laws.
- Review your credit report. Know what’s on your credit report and what you can do to increase your score. Once you’ve improved your score, request a new auto insurance quote.
- Consider a higher deductible. Take a good look at your coverage and ask yourself if there is anything you can change in your policy. If you can afford $ 2,000 in accident damages, consider increasing your deductible from $ 500 to $ 2,000 to save on your monthly premium.
- Shop around for a better rate with other insurance companies. The insurance market is very competitive and you can find a better rate with a company online or through a broker who works with multiple companies. If you find a better rate, go back to your current business to see if they will match or beat the offer.
- Choose your next vehicle carefully. Because the type of car you drive affects your insurance rates, do your research before your next purchase. Look for a car with lots of safety features (but without too many other bells and whistles) that will get you a lower rate.
What happens when auto insurance denies a claim?
Of course, you don’t just pay for auto insurance for the fun of it. If you have an accident, you expect insurance to step in and help cover the expenses. If your insurance company denies your claim, you have several options for appealing the claim.
- Contact the insurer. After reviewing your denial of claim, contact the insurance company directly. You may be able to better explain your request or gather additional information to help you understand the reason for the denial.
- File an official appeal. Most insurance companies will have a clearly established online appeal process. You’ll want to write a clear, straightforward letter that explains why the evidence you initially gathered and submitted with your claim contradicts the insurance company’s decision to deny the claim.
- Talk to a legal professional. If you think your insurance company is denying your claim in bad faith, talk to a legal professional about your options.
Reduce the total cost of owning a car
Owning a car is expensive. Make sure to watch out for any potential expenses to get the best deal you can overall, and don’t forget to research the best rates before you lock in.