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AUTO INSURER

How to Get the Most Auto Insurance Coverage for the Money

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Auto insurance will cost you, but savings can be had.

The cost of auto insurance puts a huge dent in some wallets. Drivers in Michigan, Louisiana, and Oklahoma pay far above the national average while drivers in Maine pay the least.[1] Among auto insurers, rates can vary widely, and consumers don’t always know why they’re being charged so much.

You can’t do much about the state where you live—besides moving—but you can get the most coverage for your money by keeping some things in mind as you shop for auto insurance.

Credit Matters

Your credit history reflects on what you pay for auto insurance. Insurers develop an “insurance-risk score” or “insurance credit scoring” based in part on your credit score, theorizing that you’re less likely to file a claim if you have good credit.[2] Your credit score is easily available to you, but your insurance score is not (typically, you’ll have to visit a credit monitoring service such as TransUnion to find it, not your insurance company). In any case, if your credit score is high, then your insurance rates should reflect your insurability.

Personal Demographics

Your marital status, gender, age and the city where you live are factors in determining insurance premiums. The last category can make a big difference in what you pay—if your zip code or street address is coded wrong, you might be charged a rate far above what you should be paying.[3] Therefore, it is important to review your declarations page for accuracy.

What You Drive

Before purchasing that turbocharged sports coupe, contact your auto insurer to get a quote for car insurance. Indeed, your agent can tell you which cars cost the most to insure in any given vehicle segment. Engine size isn’t the only consideration: insurers charge more for cars that don’t hold up as well in an accident. They may also raise rates for cars without recent safety features including side curtain airbags, rearview cameras, and lane departure warning.[4]

Your Driving Record

If you have tickets, then you may have points on your driving record. Points send a signal to auto insurers to raise your rates based on an algorithm set by each insurer. Your insurer won’t tell you how that works, but you can contact your Department of Motor Vehicles to obtain your driving record. If old points have not been removed from your record or points have been wrongly assigned to your record, you can have the DMV make the correction and forward a copy of your updated record to your insurer.[5]

Seek Discounts

Insurance companies offer discounts for drivers who drive just a few thousand miles in one year. Further, discounts are offered if you insure your auto and home with the same company, have been with that company for several years, are a safe driver or have recently completed a driver’s training course. Ask your insurance agent about available discounts—information that’s not always readily volunteered.[6]

Shop Around

Get at least three price quotes from different insurers with similar coverage to make comparisons easier. You may be able to save money by dealing directly with a company over the phone or via the Internet instead of through an insurance agent.

If you belong to an alumni association, a business group or some other association, a group plan can offer additional discounts. Moreover, ask your employer if the company offers a group plan for its employees and their families.

Save Money

It pays to review your auto insurance policy annually as it may reveal overlooked discounts or even mistakes that are costing you money. Never assume your policy reflects your current information as your address may have changed, drivers may have been added or dropped, or other factors may influence what you pay.

Sources

[1] Insure.com: Car insurance rates by state, 2019 edition — https://www.insure.com/car-insurance/car-insurance-rates.html

[2] The Balance: What is Insurance Credit Scoring? https://www.thebalance.com/what-is-insurance-credit-scoring-4156729

[3] The New York Times: Your Neighbor in an Adjacent ZIP Code May Pay Less for Car Insurance — https://www.nytimes.com/2018/10/19/your-money/car-insurance-neighbor-zip-code.html

[4] Insurance Information Institute: What determines the price of an auto insurance policy? — https://www.iii.org/article/what-determines-price-my-auto-insurance-policy

[5] North Carolina Department of Motor Vehicles: Driving Records — https://www.ncdot.gov/dmv/offices-services/records-reports/Pages/driving-records.aspx

[6] Allstate: 6 Car Insurance Discounts That May Save You Money — https://www.allstate.com/tr/car-insurance/tips-for-car-insurance-discounts.aspx

See Also — IIHS Crash Testing and Your Insurance Premiums

Image by 3D Animation Production Company from Pixabay

What Gap Insurance Is and Why You May Need It

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Consumer advice for new car shoppers.

totalled car
Gap insurance can be useful if your car is ever totaled.

There are various types of car insurance coverage available including collision and comprehensive coverage. Automotive liability typically comes under two categories bodily injury liability and property damage liability, both providing much of the coverage required by state law and what consumers usually seek and need.

Gap Insurance

Yet, there are other forms of auto insurance coverage including gap insurance. As the name suggests, this type of insurance closes the gap between what you owe on a car and what it is worth following total loss or a theft. You may think that you don’t need gap insurance, but without such coverage you could be left holding a hefty bill.

Gap insurance is particularly useful for consumers who own a new car. For instance, that BMW 328i Coupe has cost you $41,100 and you’re financing it with a $39,000 auto loan. You’ve made six payments of $380.44 per month (taking out a 5-year loan at 4 percent) and have reduced your outstanding balance to $36,717.

Insurance Example

One day, you find yourself driving down the road and you hit a patch of ice. Your car suddenly veers out of control, heads down an embankment and t-bones a tree on the passenger side. You’ve got some scrapes and bruises, but fortunately, you were able to leave your car relatively unscathed. Unfortunately, your car has sustained heavy damage and it won’t be drivable again.

Your insurance company has evaluated your car and has determined that repair costs will exceed what the car is worth. That worth is its actual cash value or what your car would fetch if you were to sell it. Your insurance company has pegged its value at $34,100 based on 20,500 miles driven. With its $1,000 deductible, you’ll be given a check for $33,100 and soon find yourself owing your financing company $3,617, representing the difference between the cars ACV and your remaining loan payments.

Financial Obligation

That difference is a gap and that is where gap insurance comes in. If you opted for gap insurance, the $3,617 difference would be covered by an insurance company and payment would be made by your insurer to your lender, freeing you of any further financial obligation.

Not every auto insurer offers gap insurance. Some companies, such as Progressive Insurance, do not offer gap insurance. Instead, you may be covered by a loan/lease payoff arrangement that limits the insurer’s payout maximum to 25 percent of your vehicles ACV. You may be covered, but your deductible would still be your responsibility. Check with your insurance carrier to see how you would fare if your car was totaled or stolen.

Upside Down Consumers

Gap coverage is especially desirable for upside down car buyers or people who owe more on their cars than what they are worth. And if your auto insurer doesn’t offer gap insurance, your lender may advises Monica Steinish writing for the Credit Union National Association.

Of course, one way to avoid a gap is to put down more money on your new car. When you put down at least 20 percent on your new vehicle, you are essentially assured that gap isn’t an issue with no worries that you’ll be socked with an outstanding payment from your lender.

See Also — Latest Trend: Pay As You Drive Car Insurance

Latest Trend: Pay As You Drive Car Insurance

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Imagine paying for auto insurance based on how much you drive. Instead of having your car insurance rates based solely on factors you cannot control including your age, your gender, where you live and your credit score, your rates would reflect the number of miles you drive in a year.

Onstar & similar technologies may help to lower your auto insurance costs.

“Pay as you drive” insurance is here and with it comes a new option for consumers who want to save money. This new arrangement, however, does come with some strings attached, including surrendering certain personal freedoms.

Telematics Technology

For consumers who drive a few thousand miles annually, pay as you drive policies may be an attractive option. Insurance companies know that the fewer miles you drive, the less likely you’re going to have an accident. Not many insurers have been willing to base auto insurance rates on miles driven, given the complexity of verifying that information. Thanks to telematics technology such as offered by OnStar, Entune and SYNC, auto insurers may be willing to reduce insurance premiums in exchange for monitoring your mileage and perhaps your driving behavior.

Pay as you drive policies are approved at the state level once insurance regulators have established some guidelines. Progressive Insurance offers its “Snapshop” insurance in 27 states and Allstate Insurance has rolled out “Drive Wise” in Illinois and is expected to expand this option to more states in 2011 reports Edmunds.[1]

Insurance Plans

The Progressive and Allstate plans take into consideration driving behavior along with miles driven. These auto insurers track your braking and acceleration patterns as well as the time of day you drive. Expect to pay more if you have a lead foot or if you’re given to driving late at night or in the early hours of the morning. There is much less traffic on the road during those times, but driver fatigue is a significant contributor for accidents.

Not everyone is smitten with pay as you drive auto insurance, including privacy advocates who see this option as one more way for consumers to slowly lose their rights. Advocates worry that auto insurers will track where you go and how fast you get there. Insurers contend that the information they glean is limited to how safely and how long you drive and is not based on other factors.

Teen Drivers

Will your teenager benefit from pay as you drive insurance? Perhaps yes. With auto insurers able to track behavior and miles driven, they’ll know enough about teen driving habits to set rates accordingly. Your youngster may not admit to careless driving, but that behavior will become readily apparent the next time you open up your car insurance bill.

For more information please check out Churchill car insurance uk to explore your options.

References

[1] Edmunds.com: Pay-As-You-Drive Insurance Goes Into High Gear

Resources

Progressive Insurance: Snapshot

Allstate Insurance: Drive Wise

See Also — How Are Insurance Scores Determined?