Naturally, auto insurance companies are not in the habit of revealing all the tricks of their trade. That is definitely easier to believe when you learn there are several facts about how they determine rates that they don’t share with their customers. Each company has its own set of rules on rate determination, but they follow general principles. If you are clued in to their privileged information, it is possible to learn how to save money with your auto insurance. Knowing what your insurance score is, how to avoid fees and how to get unadvertised car insurance discounts, among other things, will ultimately save you money on auto insurance.
The Benefits of Good Credit
Good credit will go a long way in helping to reduce your auto insurance premiums. There is a correlative relationship between a customer with good credit and the tendency to pay bills on time and keep the same policy for an extended period. For these reasons, drivers with good credit pay less on their premiums. Your credit score helps, in part, to determine your insurance score, which is a score that helps the company assess risk. Although your insurance score is not information you can access, you can bet that if your credit rating is high, your insurance score is favorable.
Another thing insurers don’t commonly tell you is how best to avoid fees. Raised premiums and late fees are something else entirely, but the most common fee is the one you pay by making installment payments. Instead of paying the entire premium up front, they give you the option of paying monthly. What they don’t tell you is that you will be paying between $18 and $50 more per 6-month cycle in the form of monthly assessed installment fees. The only way to avoid this is to know about it and to pay your premium in full upon activation.
Make and Model Ratings
It is not just an urban legend: certain makes and models of cars are charged higher premiums by insurance companies. Every insurer uses a numerical rating system to assign a value to each car their customers drive. Based on factors such as cost, top speed, safety features (or lack thereof), desirability among car thieves, etc, this number will greatly influence what rate they offer to the driver of the car. You may not be able to learn what number each car is given, but you can guess by the car’s tested performance and safety levels where it might stand.
Whether it’s you or a friend who has borrowed your car, at-fault accidents will most likely raise your rates immediately. Different formulas are used by different insurers, but expect your premium to go up at least 40% after one accident. If you lend out your car, the same rules apply. If there is property damage or personal injury that exceeds your coverage, you can be held liable as well.
There are a number of factors that your insurance company does not tell you. In all cases, they reflect how much money you pay for your car insurance. Whether it is something that can raise your rates or a way to save money, by keeping the information privileged, auto insurers maintain an edge over their customers. Learn what they know, and it will help you save money in the short run and avoid price hikes or steep bills in the future.