Car Recalls and Your Insurance Rates

You have just received notice from your car manufacturer that your vehicle is being recalled to fix a defect. Fortunately for you, the expense of that repair will be absorbed by the manufacturer although you may lose the use of your car for several hours while your dealer completes the work. Car recalls are a common occurrence, but when it comes to your insurance rates, your premiums should remain unchanged — provided that you take action on the recall notice.

insurance rate

Insurance Rates

There are other factors beside car recalls that can drive up your insurance rates including:

1. Your credit score rises. If your credit takes a hit, your insurance premiums can rise. Insurance companies use something that is called an “insurance score” to calculate your risk. Much like a credit score, an insurance score is based on your financial habits, with a lower score driving up your insurance rates. You can compare insurance policies by using a comparison site such as Esurance, Progressive or NetQuote.com.

2. Your deductible falls. If you get a new car or make changes to your current car’s insurance coverage, your insurance rates can increase if you opt for or change to a lower deductible. While a $250 deductible means you will absorb only a small amount of the loss, a $500 or $1,000 deductible translates into lower insurance rates.

3. You no longer qualify for discounts. You canceled your professional association membership and soon discovered that your insurance rate has gone up. Yes, insurers offer discounts for a variety of reasons including for safe driving, multi-car insurance, and even your membership in certain professional associations.

4. You are driving more often than you were in the past. Once in a while your insurance company will ask you about your driving habits. You need to truthfully answer these questions as incorrect information can mean that your insurance will be canceled. Worse, your insurer may refuse to pay your claim. Your insurance rates will rise if your driving habits change. For instance, if you were using your car for pleasure mostly, driving 8,000 to 10,000 miles per year your rates will come in lower. However, if you begin to use your car mostly for business, putting 20,000 to 25,000 miles per year on your odometer can drive up your insurance rates.

5. You choose a high-end, sporty model. Insurance companies will insure any vehicle that you choose to buy. Insurance rates, however, can fluctuate widely between vehicles that perform well in crash tests and with those that do not. Moreover, if you drive a flashy car, such as a Chevrolet Corvette ZR1 or an Aston Martin Vantage Roadster, your insurance rates will go up considerably. You’re not only paying for the increased value of the car, but for the increased perceived risk that such a fast car will be for your insurer.

6. You receive a ticket. Moving violations can cost motorists handsomely, even well beyond the $125 charged for driving 66 mph in a 50 mph zone. You may need to take off from work for a full day to fight the ticket or hire an attorney to dispute the charge. A ticket will be reported to your state’s department of motor vehicles, with those three to five points staying on your record for up to three years. Your insurance company will learn about the ticket and may raise your rates accordingly. While one ticket may not have a huge effect on your rates, two or more can drive up your premiums substantially.

Ignored Recalls

So, what about the car recall notice that you ignore? Will it affect your insurance rates or possibly result in a claim denial? It just might notes Bobbie Sage the personal insurance guide for About.com. It may be hard for your insurer to prove it, but if you demonstrate neglect in responding to a recall notice, your insurer or another claimant could hold you personally responsible in an accident. Therefore, handle all recall notices promptly.


See AlsoHow Are Insurance Scores Determined?

Author: admin
Matt Keegan has maintained his love for cars ever since his father taught him kicking tires can be one way to uncover a problem with a vehicle’s suspension system. He since moved on to learn a few things about coefficient of drag, G-forces, toe-heel shifting, and how to work the crazy infotainment system in some random weekly driver. Matt is a member of the Washington Automotive Press Association and is a contributor to various print and online media sources.

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