Some Things Your Car Insurance Company Won’t Tell You

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In some states, like Texas, 30% of drivers don’t have insurance, or adequate insurance, so it’s critical to get uninsured/underinsured motorist coverage to cover your medical bills, lost wages and pain and suffering in the event that an uninsured motorist injures you.
Think beyond your car. The more assets, and income you have, the more insurance you need. A personal liability umbrella policy, in conjunction with homeowner’s coverage is not very expensive, yet can provide critical protection of your wealth. If you already have good family health insurance, you might be able to avoid paying more for personal injury protection or medical payment insurance related to your car coverage.
Your neighborhood counts. Crime rates are a factor. Consider the types of cars those around you drive. If you live in a nice area, full of high-end cars, you may want to increase your property damage coverage. If you live in a rural area, you’ll probably enjoy lower rates than those living in high-traffic urban areas. Living in downtown Dallas, Texas, is likely to cost you more than living in a quiet suburb on the outskirts of Kansas City, Missouri.
Where you park your car might impact your insurance premium. If you park inside a garage, it’s less vulnerable to theft and weather damage than parking it in a driveway or street, and it may entitle you to a discounted rate. If you work at home, have a short daily commute, or use public transportation, you might also be able to save some money on your car insurance policy with a low mileage discount.
Depending on what you do for a living, you might be able to save on your car insurance premium. Some professions are deemed lower risk. Teachers, scientists, police officers and firefighters often get discounts on their insurance premiums.
College students that go to school more than 100 miles away from home may qualify for a discount, based off the assumption they’re seldom behind the wheel of the family car. Getting good grades pays, in more ways than one. Ask about good student discounts.
It pays to get married. Married men statistically have fewer accidents than single men, so if you are looking for a little extra incentive to take the plunge, consider the savings on your car insurance premium – just don’t make it part of your proposal. If you have more than one car in your home, ask about a multi-car discount.
Drive safe. A speeding ticket can cost you more than just the fine. A bad driving record can also jack up your premium costs. Next time you’re in a hurry, slow down, and protect yourself and your wallet.
Buying the right kind of car can save on auto insurance. Cars with built in safety features like anti-lock brakes, side air bags and automatic safety belts cost less to insure. Cars that are frequently stolen generally have higher insurance premiums. You can check with the Highway Loss Data Institute for theft reports on the make of car you are considering buying.
If you have your heart set on a sporty vehicle, make sure your wallet is prepared to handle the higher insurance premium. Rates can be significantly higher for high-performance vehicles. If you have a loan on your car, the lender has a say in what type of coverage you have on your vehicle to protect their investment. Be wise and ask your insurance agent how much it would cost to insure the car you are considering buying, before you sign on the bottom line.
You can reduce your monthly premium on car insurance if you are willing to live with a higher deductible. If you’re good driver, it could be worth considering. As your car gets older, you may also want to change your coverage to save money. If the actual cash value of your car is very low, you might want to consider dropping comprehensive and collision coverage. However, never skimp on liability coverage, regardless of the age or value of your vehicle, because if you cause a serious accident, you could be on the hook for hundreds of thousands of dollars.

Some Things Your Car Insurance Company Won't Tell You

Car Insurance Company

1. How to determine the value of “total loss.”

Most companies will tell you that they use at least three methods or schemes to determine the actual totaled vehicle’s value, including value books, computer-generated quotes from dealers, and local market research. In this case, you will probably think that local area is your current neighborhood, but the insurer does not specifically define it. If, in any case, the company cannot find an auto replacement in your community, so they have to find it not from your “local area,” your totaled car’s value is certainly affected. For example, if you currently live in New York, replacing your totaled vehicle in suburbs will be cheaper than in the city. The insurance company will, of course, use quotes from suburbs area as the most-reasonably-priced estimates. The primary purpose in totaling a vehicle is to allow the consumer (the insured person) to purchase the same car that is totaled in an accident within the local market. Since they use three different schemes to figure out the real value of a totaled car, a consumer may end up with a cheaper car than the totaled one. It is impossible to be sure what value you will get when your company does not tell you how they determine it.
Fortunately, you can do some smart methods to help yourself and your company to do the value determination. First, you have to produce valid proof that your car was in good conditions when the accident occurred; car in good condition has better value than a wreck. Bring a copy of maintenance records, including oil changes and inspection by an authorized mechanic. The records will tell your company that your auto was regularly maintained, meaning it was actually in great shape (in terms of appearance and performance) when the accident occurred. Moreover, you probably had special features installed such as a multimedia system, anti-theft system, anti-lock brakes, rearview camera, or 5-harness seat belt. The car insurance company may charge you more because of some special upgrades, so make sure that your insurer includes that in the evaluation.
Another good thing is to find at least three dealers and get quotes on replacement from them; make sure all dealers in your local area or at least within short driving distance from your home. Present the quotes to your insurer and ask your insurer to provide a list of some car dealers who probably can afford a car for the price listed in the quotes. If you are not satisfied with the company’s value determination or you get less than you expect, you can choose to do mediation. So, meaning you present the case to a third party (neutral) to get help to settle the dispute or arbitration, or you can even request a formal inquiry to the court.

2. If you want to cancel your policy, do it officially

Most companies say that consumers can cancel their policies at any date, but you need to notify the insurer concerning the exact date you want to end the coverage. The statement is clear enough; in other words, it says consumers have to notify their companies when they want to cancel their policies. However, consumers often think that when they ignore the last bill before renewal, the company will automatically end the policy. Too bad, this is not how it is done. People can forget and deliberately miss a bill, and the company understands that. After this first missed bill, your insurer is going to send you one more bill for premium payment; if you don’t pay the bill, you will be cancelled for non-payment, and the record will hurt your credit score.
What you should do when you want to cancel the auto insurance policy is to let the company know that you are canceling. Please make sure that you provide a specific date; it helps you avoid being uninsured for a certain period, time, term. The cancellation request will be sent to you, and all you have to do is to put your signature. It is recommended that you carefully check the document before signing it. Some companies may require you to provide valid proof that you indeed have another coverage before they can approve the cancellation. If you’ve financed your car, the dealer needs the updated policy information because valid proof of insurance is required in the purchase contracts.

Credit history still matters

The use of credit information to determine approval and premium rate is still common, even though some states already started to ban such practice. Some (if not most) companies use the credit history to generate risk score. They believe that it strongly linked or correlated to the likelihood of the consumer reporting a claim. More likelihood of filing a claim is the same with high-risk driver that usually also pays more expensive premium fee compared to “safe-driver” or “the preferred class.” The preferred consumers are those with stable credit card history as it suggests financial stability, meaning they are not likely to miss a payment. People of this category are safer consumers to insure compared to people with shaky credit history. Auto insurance companies do not like consumer who pays sporadically or changes accounts quite frequently.
Some credit card issuers offer free credit score checking, but in most cases, you need to pay for the service. Unlike credit score, risk score for insurance-related matters will not be available for you, but both probably indicate the same thing, which is financial stability. If you are currently in the market to purchase auto insurance, and it turns out that you have quite unusual activity on your credit history within the only certain time frame, you can wait until one month to allow the credit activity to go back to its usual condition. If you cannot keep the credit score stable, prepare yourself to pay the more expensive premium fee.

3. Budgeting by installments is not always efficient.

Installments can pay almost all items, and consumers think that it is indeed the best way to budget the expense. When it comes to auto insurance, you can ask the company to divide the annual premium into a monthly basis, quarterly, or on six months. Please put in mind that dividing the annual premium will cost you “fractional premium.” You can consider this additional service fee to arrange the installment. It can be as cheap as $10 per payment; the more you break it down, the most fractional premium to pay.
Most companies will probably offer you to pay in installments since it makes more money for them. When you apply for insurance, it is wise to ask whether there is any additional charge for installments option, and then you can compare the difference. If the fractional premium is not very expensive, then perhaps it is worth it. Another big difference between upfront payment and installments is that certain companies will immediately cancel your coverage if you miss one payment; even worse, they can do it without notification. It is best to pay upfront if you can; the entire process will be easier, and you can indeed save a few dollars.

Every vehicle model and type has certain premium rate

Of course, you all know that sports cars need more expensive insurance policies than a van, but insurance companies will not tell you the exact numbers. In general, attractive, sporty, luxurious car with turbocharged engine will indeed go very quickly on the road, and it increases the risk of accidents, but this is not always true considering the discounts for safety features, security features, mileage (especially when you drive it less), etc. Auto insurance companies have a specific system to know the premium for all car models you can buy, based on the system rating by ISO (Insurance Service Office). Every type of car is rated from 3 to 27; higher number means a higher premium. Insurance Service Office says that it will not release the rating system for publication because its clients are insurance companies.
You will not get the rating system from your insurer; you may not even find it anywhere at all. The best thing you can do when you want to purchase a new auto is to ask the insurance how much insurance premium you need to pay for a new car that you want to purchase. If you keep a good relationship with an independent agent, he/she should be able at least to predict the price based on raw calculation.

4. Filing claim increases your premium.

People are always interested to see insurance companies reduce the premium fee to attract potential customers. It is indeed one of the best things customers get from the competition in the market, but your insurer can increase the price right away after you file your first claim. The industry standard is to increase the premium fee up to 40% of the base rate after the first at-fault accident. With the help of an online car insurance calculator, you get a base rate of $500, your premium increases by $200. Some companies have different rules, but there is always a big chance your premium will go up after the first-at-fault claim. Some insurers offer “first-accident forgiveness,” meaning your first actual claim will not affect the premium at all, but the variable and requirement for eligibility can be different from company to company. You should ask your insurer if such discount is available and how to qualify for it.
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