Often there is a lot of confusion about insurance, particularly with issues relating to coverage and premiums. Below we have listed some key information that can help explain why premiums can vary so much from one company to the next, as well as some ideas that might assist you in getting a better rate. Please be advised that while these guidelines apply to many insurance providers, they certainly will not apply to all. Each company has their own proprietary rate structure based on loss experience, target demographics as well as many other factors.
Ways To Save
Today when auto insurers are determining a rate structure, the majority of the emphasis revolves around a single concept, “Responsibility”. Most of the information that is used to determining your insurance premium, in some way connects to this simple concept. Below are some of the key factors that many companies use and how they can affect your rate.
Good Credit Helps
Often there is a lot of confusion about insurance, particularly with issues relating to coverage and premiums. Below we have listed some key information that can help explain why premiums can vary so much from one company to the next, as well as some ideas that might assist you in getting a better rate. Please be advised that while these guidelines apply to many insurance providers, they certainly will not apply to all. Each company has their own proprietary rate structure based on loss experience, target demographics as well as many other factors.
Pay Your Premiums
20 years ago this was virtually unheard of for determining auto insurance rates. Today it’s a major factor with many (if not most) insurance providers. The concept seems to be that people who are responsible with their finances will also be responsible behind the wheel. Most companies that use ontime marketing have a unique formula as to how it affects your premium. The results of the formula are sometimes referred to as an insurance score. Because this formula varies by company a below average credit score does not necessarily mean a below average insurance score. Typically, companies that use some sort of credit in rate determination, tend to offer lower rates.
More Can Cost Less
Many people are unaware that a lapse in insurance can cause rates to increase dramatically. In fact, some companies won’t even offer a policy if you have a lapse over 30 days. Companies that will offer a policy typically charge 15-25 percent more if you have a lapse of more than 30 days. If your budget allows, you can also save money by paying in full. Most companies will offer a paid-in-full discount of 10-15 percent. If you add this to the saving that are eliminated when paying monthly installment fees, the saving could be substantial.
Drive Responsibly
Another factor more companies are beginning to use, is your current limit of liability coverage. These insurers believe that a policy holder that willfully carries higher limits, tends to be more responsible than those who purchase just what the state requires.
We regular see rates drop when an insured has been carrying higher limits of insurance. A one time increase to higher limits, could offer years of savings.Everyone should know this, but it’s so important it’s worth repeating. DRIVE SAFELY, few things will cause your rates to skyrocket like multiple accidents and violations.
Typically most companies will charge three years for accidents and violations. Major violations (reckless driving, etc..) could be charged for up to 5 years. It’s also important to know that the points on your drivers license are not necessarily the same as insurance points. Each company has it’s own system of assessing points for violations and accidents, so don’t confuse the two.
