In Part 1 of this post, we discussed how the car you drive, where you live, and other personal details could affect the price you pay for auto insurance. In Part 2, we further explore the factors that insurers may use to determine your premiums, including the type of coverage you purchase, and the information about you that may be hidden in consumer and driver records.
Your Insurance Coverage and Amounts
It comes as no surprise to most that broad insurance coverage with high limits generally costs more than a bare-bones policy that barely meets the state’s coverage requirements. For many looking to save money on auto insurance, coverage limits are the first place to look to cut costs. Doing so, of course, could prove to be a costly mistake. Dropping comprehensive and collision insurance and sticking only to minimum liability insurance could save a little on premiums, but it leaves you exposed to expensive risks, including the total loss of your vehicle or worse -a major lawsuit. A better alternative is sticking with the full coverage you need, but shopping with an independent agent at Anton Insurance who can help you compare rates from multiple insurers and save.
If you choose a low deductible when purchasing auto insurance, it means you may only have to pay a few hundred dollars or less toward future claims for damages to your vehicle. A high deductible, however, puts more financial responsibility on you for your claims, requiring that you make a larger out-of-pocket contribution toward your loss. For obvious reasons, many drivers prefer low deductibles, as they minimize the financial burden of a collision or other covered damage event. However, low deductibles typically translate to higher premiums, which may be undesirable for drivers looking to cut costs. By switching to a higher deductible, a driver can still benefit from a full coverage policy, albeit at a lower rate.
Consumer and State Reports
There are consumer and state reporting agencies that store information about virtually everyone. Insurers have access to all of this information and can use it to assess your insurability and perceived risk of making future claims. From the time you started driving, the state started a file to hold data about your moving vehicle violations. When you purchased your first insurance policy, your insurer began tracking your claims activity and may have even reported it to be included in your CLUE report. Of course, there are also agencies that track your personal financial activity, including your on-time and late payment habits, applications for credit, and personal debt load.
While you may not be able to change what haunts your records from the past, you can take comfort in knowing that the current information in your driving record, CLUE report, and credit report likely will not affect you forever. Old information often disappears over the years or becomes a non-determining factor, meaning you may be able to improve your auto insurance rates in the future by maintaining a good driving record, remaining claims-free, and working to improve your credit score.
Never overlook the value of auto insurance discounts. They could drop the cost of your coverage by as much as 20 percent or more in some cases -but only if you know to apply for them. Insurance discounts are available from many insurers and can vary in types and amounts. From low mileage and good student discounts to savings for drivers who enroll in an approved safety education course, an independent agent can help you search for the ones that benefit you most.