5 simple habits that could lower your auto insurance costs

2011-03-13T06:05:00.001-07:00

You can save a lot on your auto insurance costs by tweaking some simple habits. That is why you need to give it a hard thought and see how you can bring down the monthly premiums that you pay on your auto insurance. It may seem like a small amount, but over the years it will amount to something substantial if you can save every single penny that you can on auto insurance premiums. Here are some simple habits that will prove effective in bringing down your auto insurance costs.

Take care of your credit history
It may seem totally out of context in the beginning but you must realise that every auto insurance provider looks at your credit history before determining the premium that you should pay for the coverage you are asking for. A good credit history indicates that you are responsible and not reckless, two characteristics that go a long way in guessing if you would be involved in accidents or claims in the future. Someone with excellent credit would also pay premiums on time, thereby providing an added incentive to the insurance companies to give a discount.

Don’t claim for small damages
It is better to let go of minor damages, dents and brushes instead of claiming for everything. This is because the more number of times you claim, the higher your auto insurance premium will go up. Coverage will cost you a lot more than what it would have if you didn’t make any claims. So if the cost is less, the insurance claim isn’t worth it.

Take care of your grades
If you are a student, try to get good grades. Insurance providers favour students who act sensibly and get good grades at school and college as they are also less likely to be involved in rash driving and accidents.

Drive as less as possible
Walk if you are not in a hurry to nearby places. Use public transportation as often as you can and go for car pooling with friends. This will not only save fuel but also your insurance costs as these habits bring down the mileage and thereby the risk of you being involved in accidents.

Follow traffic rules
Don’t break traffic signals and never exceed speed limits. Traffic violations cost you more than just the penalty that you are charged on the spot. So try to keep your driving record as clean as possible.

Auto Insurance Frequently Asked Questions!

2011-03-13T06:01:00.000-07:00

Question: What are Car Financial Responsibility Laws?

Answer: This is the law that says you have to prove that you are financially able to pay for anything you may be responsible for while driving your car. The easiest way of showing this is by having car insurance and that is what the majority of people do to comply with this law. Some states to have other ways that one can show financial responsibility such as giving a large cash deposit for the DMV.

Question: What Happens if I Choose Not to Purchase Car Insurance and
Still Drive
My Car?

Answer: That depends on the state you live in. Most states have stringent laws about having car insurance and if you don't choose to follow these laws by not purchasing car insurance, there can be tough penalties and fines. You can probably for sure count on loosing your drivers license and getting your car impounded but then you will be charged with breaking the law and that will be on your police record. Also, if you cause an accident, on top of the above mentioned things you will still have to pay for the damage to the other vehicle and people who may have been hurt, which can easily run into thousands of dollars.

Question: Is anyone who drives my car covered?

Answer: In most cases, yes, as long as they have the permission or reasonable belief from the insured that they can use the vehicle. The insured is the person named on the insurance policy and their spouse if applicable.

There are some exclusions, so you would need to look at your particular insurance policy to make sure. Remember, everyone in your household must be listed on your insurance policy if they have a license. For example, if a girlfriend you live with uses your car, she may not be covered if you did not list her on your insurance policy. On the other hand, if you live separately, she could use your car with your permission and be covered.

Question: What are the best liability policy limits?

Answer: It is generally accepted among insurance agents that the state minimum policy limits are not enough. Most insurance professionals would agree for the average driver the best liability limits to have are 100/300/100. This means:

· 100,000 per person for bodily injury

· 300,000 per accident for bodily injury

· 100,000 per accident for property damage

Since in most areas medical treatment is in fairly the same range, the last limit, per accident for property damage, is the one you may want to take into account if you are not the average driver. If you live in an area where you feel that if there was an accident, that was your fault, and property damage may exceed 100,000, you may want to consider higher limits. Remember, property damage is the other person's car and any other property damaged during the accident if you are at fault. In some areas one's landscaping can cost over 100,000!

Question: What is the difference between comprehensive and collision?

Answer: Collision coverage is when you have a collision with something like another car. Comprehensive coverage is when it is anything else other than a collision such as fire or theft. Most people would have both coverage's when using the car on a regular basis. Sometimes when one is just storing a car they may only keep comprehensive coverage since they are not using it on the road therefore, it is unlikely to be in a collision.

Question: What are the minimum policy requirements?

Answer: Liability is required in every state unless you can prove financial responsibility otherwise. Requirements for financial responsibility and minimum liability requirements can be found on your state insurance commissioner's page here. Limits vary widely from state to state and, if you carry the minimum limits, when you drive into another state you will automatically assume that state's minimum liability requirements

Question: Why does my insurance cost more than my agent said it would?

Answer: This is called a misquote. Determining your premium depends on many factors, including where you live, the kind of car your drive, how much you drive, how much coverage you want, your driving record, and your age.

If an error is made in reporting any of these facts, your rates won't be quoted correctly. Misquotes can also happen if your agent makes a mistake in applying the company's rating system. Auto insurance misquotes can happen when your application information differs from your actual driving record.

Companies ask states' motor-vehicle divisions to verify the records of drivers they insure. If you told your insurance agent you have a perfect driving record, and you don't, your insurance company will charge higher premiums than your agent quotes.

To avoid misquotes, provide accurate information about your driving record and any other facts affecting the cost of insurance, such as the make of your car or how far you commute to work. Verify all information before signing the application.

Question: How does my driving record affect my insurance premium?

Answer: The premium you pay is a direct reflection of your driving record for the past three to five years depending on the insurance company. Insurance companies order driving records from the DMV of your residence state and from other states where you've been licensed. Statistics show that drivers with tickets and accidents are more likely to have accidents than drivers with clean records.

Question: Why is it harder to get insurance if drivers in my household have bad driving records?

Answer: Many companies will not insure you if you live with a relative who has a poor driving record. If your teenager has a poor driving record, you may have trouble getting a preferred rate because he or she is defined as an "insured" under your policy.

Some companies will exclude this person by name from the insurance policy. Many companies will not insure anyone in the family unless every driver in the household meets their requirements.

Question: My car was totaled and my policy did not pay what I think my car was worth. Why?

Answer: Most auto insurance policies pay the actual cash value (ACV) of a vehicle totaled in an accident. The ACV is equal to the market value of an auto immediately before the accident.

Insurers must use a fair and reasonable method to determine the value of your car. If you have concerns about their decision you may be able to negotiate with your insurer by telling them why your car may have had more value that what the insurance company originally determined.

Question: What happens if my loan was more than my insurance company says my car was worth?

Answer: Sometimes the value of a car is less than the balance on your car loan. There can be several reasons for this. Interest rate changes may have increased the amount of your loan. Rebates may not have been applied to the purchase price, or poor maintenance of the auto may have reduced its value. The insurance company bases its payments on the actual cash value (ACV) of the car, not the amount of your loan. In some states you may be able to purchase a special type of insurance, known as guaranteed auto protection (GAP), when you buy a car. GAP insurance covers the difference between the ACV and your loan balance.

Question: My teenager just got his license, but I do not allow him to drive my car. Does he need to be insured?

Answer: In most cases, yes. Automobile insurance policies require every licensed person in your household to be listed on your insurance policy unless they have a completely separate policy of their own. This includes a teenager who just received their licence or a college student who still uses your address as their residence and/or visits regularly on weekends, vacations, ect.

Question: What do insurance companies consider when they decide whether to cancel or not renew policies?

Answer: Insurance companies evaluate the risks associated with each policyholder to determine if you are a "good risk" or if your policy should be canceled or not renewed. Insurance companies, among other factors, will primarily review your claims, driving, and credit history. It is most favorable that your policy will not be canceled if you don't have a history of filing frequent claims, have maintained a clean driving record and your credit history is good with no bankruptcy's.

Question: Does everyone have to have auto insurance?

Answer: Yes, automobile liability insurance, or proof of financial responsibility is required in all fifty states. Although each state sets their own limits on how much insurance is needed, these are only minimum limits and in most cases additional coverage is needed if you don't want to have to pay additional expenses out of pocket. If you have a lease or loan on your car you are usually required by the lender to have comprehensive and collision coverage in addition to the state required liability coverage.

Question: Do I Have Insurance Coverage for a Rental Car after a Car Accident?

Answer: It would depend on your car insurance policy. In order to receive a rental car after you have had a cae accident you would have needed to add that option to your car insurance policy. If the coverage is on your car insurance policy then you should be able to have a rental car for up to 30 days while your car is being repaired. Even if you did not add the rental car coverage when you started your car insurance policy, your insurance agent may have put rental car coverage on your car insurance policy so just call your insurance agent to verify if you have the coverage or not.

Sometimes people unknowingly think that their motor club mmbership will provide them with a rental car if they get into an accident. Motor clubs typically provide emergency services such as towing and battery jumping and don't provide rental cars or rental car reimbursement if you needed a rental car while your car is being repaired. So, although being a part of a motor club is a good idea for extra coverage and they may even provide a discount on a rental car if needed, don't depend on your motor club to provide you with a rental car.

AUTO INSURANCE

5 simple habits that could lower your auto insurance costs

Auto Insurance Frequently Asked Questions!