insurance score

How to Get the Most Auto Insurance Coverage for the Money

October 4, 2019 by admin Leave a Comment

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

Image by 3D Animation Production Company from Pixabay

How to Save Money on Car Insurance

November 2, 2018 by admin 3 Comments

Your car insurance costs may be on the rise with several factors possibly contributing to that increase. For example, a new driver, a different car or a change in coverage can send your rates soaring. Just the same, you can save money on auto insurance by implementing the following money-wise strategies immediately.

2019 Lexus ES

1. Review Your Credit Reports

Every consumer shopping for car or homeowners insurance is assigned an insurance score. That three-digit score is based on certain credit report characteristics and is used to measure risk, not creditworthiness. Just as you can retrieve your credit score, you can obtain your insurance score.

Because both your insurance score and your credit score are based on your credit reports, you should review all three of your consumer credit reports to determine if there are problems listed that may contribute to a lower score. For instance, late credit card payments, high outstanding balances on certain loans and a checkered credit history can impact both scores.

Free copies of your credit reports are available through AnnualCreditReport.com. Review your reports for accuracy and work on building a better credit history. Gradually, your insurance score will rise thereby lowering your auto insurance rate.

2. Review Your Insurance Coverage

How much insurance do you have? How much insurance coverage do you need? If you have not reviewed your auto insurance policy in some time, do so before it is set to renew.

You can save money on car insurance by assuming greater risk. Instead of a $200 deductible for comprehensive coverage, consider $500. Collision coverage is ideal for most cars that are less than 10 years old, while dropping collision coverage for high mileage older vehicles can save you money.

New drivers on your policy will cause your insurance rates to spike. Encourage your teens to maintain good grades as insurers offer discounts for students that have at least a “B” average.

2019 Volvo XC40

3. Qualify For Discounts

Insurers regularly offer discounts to consumers in a bid to attract and retain their business. You may qualify for discounts in several areas, immediately reducing your auto insurance premium by at least 10 percent.

Consumers who use the same insurer for their cars and home will receive a discount for bundled insurance. Contact your insurance agent to inquire about available discounts including safe driver, anti-theft device and for completing a defensive driving course. Affinity discounts are available if you belong to certain associations or organizations, such as a credit union.

4. Improve Your Driving Record

Points on your driving record can send your car insurance rates soaring. Employing safe driving habits can gradually lower your rates with your record typically cleared of all of its infractions within three years.

You can speed up the point reduction by completing a department of motor vehicles approved safe driving course. Visit your state’s DMV site to learn what courses are available. Typically, if you successfully complete a state-recognized driver safety course, the DMV will shave as many as three or four points off your driving record, lowering your car insurance premium.

2018 BMW 740e

5. Consider Your Future Car Purchases Wisely

Your heart says, “sports car” but your head says “family sedan.”

Although there is nothing wrong with following your heart, your head may insist that you save money. This is where your choice in vehicle matters and will affect your insurance rates.

But before you buy any car, make a call to your insurance agent to receive an insurance quote. You can also find out which vehicles will cost you less by visiting the Insurance Institute for Highway Safety’s website to retrieve the crash test ratings for today’s new cars.

The IIHS is funded by the major insurance companies and your rates are based in part on how well a car holds up in a crash. Choose a model with a “top safety pick+” rating and your insurance agent will offer a correspondingly lower rate quote than a vehicle that isn’t rated as high.

Other Underwriting Factors

Each auto insurance company has its own insurance rating system, but there are general guidelines these companies follow that make it possible to compare coverage. Other factors that can affect your insurance rates include where you live, your gender and age, your marital status and the number of miles you drive annually.

7 Ways to Trim Car Insurance

June 4, 2015 by admin 2 Comments

You may not have reviewed your car insurance until the day that you took delivery of a new car or added a driver to your policy. Surprisingly, you find yourself faced with a minor crisis, one that you were wondering how you will meet the added cost. Indeed, it may have come in at a much higher rate than what you had anticipated.

Fortunately, there are sensible ways for you to trim your car insurance costs. We will review seven of them.

1. Perform comparison shopping. The best way to save on car insurance is to comparison shop. Auto insurance premiums can vary by hundreds of dollars amongst providers for the same coverage. So, obtain several quotes, then call your current insurer and ask for the company to match the lowest rate. If they can’t or won’t budge, then switch.

2. Know your credit rating. Your credit rating can impact your insurance premium. Insurers develop a credit-based insurance score and utilize that three-digit number to establish your rate. Your scores are ultimately based on your credit reports — if the information about you is wrong or negative, it can lower your score. Obtain copies of all three credit reports (i.e., Experian, TransUnion and Equifax) by visiting AnnualCreditReport.com. In fact, you are entitled to one free copy of each company’s report annually.

3. Find package discounts. You may be entitled to car insurance discounts, but you don’t even know it. For example, discounts are routinely dispensed to customers who have more than one vehicle insured. Additionally, you can obtain discounts by having the same insurer bundle your homeowner’s insurance policy. Moreover, insurers offer discounts to customers based on their age, military service, superior grades for students, and whether your car has certain types of safety and security equipment.

4. Take a driver training course. Drivers who have one or two tickets and have had that information reported to their insurance company pay a premium for their insurance. However, if you complete an authorized driver training program, your state may eliminate points, saving you money on your car insurance. For example, in Florida drivers may take an approved course no more than once per year and no more than five times in a lifetime. But that course may only be helpful if you have multiple non-criminal driving offenses within a short time, such as in 18 months. “In the event of things like an accident, there is no point in opting for driver school (unless the person already has a problem with points on his or her license) as the accident will be known to the insurer and will be surcharged, regardless of no offense being shown on the driver’s motor vehicle record. Also, if multiple offenses occurred in conjunction with the accident in question, there is no need to take school other than for points on the license,” explained Kristofer R. Kirchen, President, Advanced Insurance Managers, LLC in Tampa. In any case, it is at the discretion of your insurer what benefit is derived from a driver training program.

5. Review your accident reports. If you have been in an accident or have points on your record, that information may be working against you. Contact your state’s Department of Motor Vehicles (DMV) and review your driving record. In particular, outdated or wrong information should be identified and removed from your report and an updated copy offered to your insurance company.

6. Raise your deductibles. How much skin do you have in with your car insurance? In other words, how high are your deductibles? The higher the deductible, the greater your share of the insurance risk. When you select a higher deductible, your insurer will lower your rates. So, determine whether the higher deductible is a sufficient risk to offset your potential losses.

7. Claim your carpooling discount. Only a small number of people carpool, but if you regularly trade-off driving with at least one other person who drives hit or her own car, then your insurance company may lower your rate. In particular, your insurer may offer a carpool discount based on lower annual miles driven each year.

Saving Money on Car Insurance

Even if you haven’t added a driver or changed cars recently, a once annual review of your car insurance policy can save you money. With this in mind, examine your two recent policies. If you notice an increase that is greater than the cost of living, then contact your insurer.

And if you are planning to buy a new car or add a driver, contact your insurer for rate quote information first. As a result of that conversation, you may find yourself reconsidering your purchase or asking your insurer for a student discount.

See Also — How Are Insurance Scores Determined?

How Are Insurance Scores Determined?

September 25, 2014 by admin 4 Comments

If you have not heard of your insurance score, you are not alone. An insurance score, like a credit score, is based on information derived from your credit reports. Insurance companies have found that there is a correlation between the way you handle your credit and future accidents as well as your likely insurance claims. Although credit reports are used to establish both credit scores and insurance scores, there are also some important differences.

what is your insurance score Your credit score is based largely on your ability to repay what you have borrowed. Your insurance score goes beyond your credit report to look at the behavior of policyholders with similar credit temperament who have filed claims with the insurer. You should know that insurers set their own insurance scores, consequently, your score will vary from company to company.

A credit score, such as one from FICO, is used by 90 percent of US lenders. That score is based on five factors: your payment history, the amount of your debt, the length of your credit history, new credit and the types of credit. Loan approval and terms are based on your credit score.

Your insurance score will also look at the same factors, although your insurer likely isn’t interested in your income information or job history, criteria that banks and other lenders look at when deciding whether to extend credit to you or not. Even so, the better your credit score the higher your insurance score.

Insurance Score Determination

Auto Trends reached out to the insurance industry to glean more information about insurance scores. Kristofer R. Kirchen, president of Advanced Insurance Managers, LLC, in Tampa, Florida, directed us to the National Association of Insurance Commissioners (NAIC) website to learn how scores are determined.

Credit-based insurance scores are nothing new, arriving on the scene in the early 1990s. According to FICO, some 95 percent of auto insurers and 85 percent of homeowner insurers use credit-based scores. However, not all states allow credit-based scores, thus it is important for consumers to check with their state insurance department to learn what their state permits.

You should also know that insurance companies may only consider your credit-based insurance score as “one factor in its underwriting process” according to the NAIC. If you are seeking coverage for a vehicle, the insurer will consider the make, model and age of your car as well as the age of the drivers, the miles driven annually and your zip code. Yes, you can ask your insurer if an insurance score was factored to underwrite and rate your policy. You should also ask your insurer what risk category you were placed in after your quote was received.

Obtain Your Score and Improve It

Kirchen noted that CreditKarma.com provides both your credit score and your insurance score for free. You need to register with that website, by providing an email address and a password to track that information. This writer has been using Credit Karma and found his insurance score by clicking on the “view all my scores” button. In this case two scores were presented: an auto insurance score and a home insurance score with only a small numerical difference between the two.

If your insurance score is low you can improve it the same way you can raise your credit score: by using your credit wisely, paying your bills on time and reducing your debt. Kirchen also advises consumers to clean up collection activity as found in their credit reports. You can obtain one free copy annually of all three of your credit reports by visiting AnnualCreditReport.com.

Now About That Claim

It is important for you to know that placing a call to your insurance company to report an incident when there is no damage to either vehicle should always be avoided. That call will show up on your claims history even though no pay out was made noted Glenn Jacobs of the Jacobs Agency in Knoxville, Tennessee. Your insurance score will suffer and as a consequence, you may be charged a higher rate for auto insurance.

Your Insurance Score and Insurance Premiums

April 8, 2013 by admin 1 Comment

Every consumer has a credit score, a three-digit number that is based on your credit history and behavior. That number can have a profound impact on the way that you live as mortgages, personal loans and even apartments and a new job may depend on your score. The higher your credit score, the more likely creditors, landlords and hiring personnel will view you more favorably.

Insurance Score

Smashed BMW. — Your claim history affects your insurance score.

The insurance industry values your credit score too, but it is only part of a larger or more comprehensive measuring tool. That tool is your insurance score, a number that few people outside of the insurance industry are aware of.

The Insurance Information Institute describes an insurance score as “a numerical ranking based on a person’s credit history.” These scores help insurers assess risk and are also considered “a good predictor of insurance claims.”

An insurance score is based on actuarial studies that indicate whether a person is more likely to file a claim or not. Consumers with a lower insurance score are more likely to file a claim and will, therefore, be charged higher premiums.

Credit Bureaus

As you might guess there is a parallel between credit scores and insurance scores. The former is used to predict credit delinquency, the latter is for predicting insurance losses. Both scoring methods are based on information gleaned from your three credit reports, data that is collected by the three credit reporting bureaus: Experian, Equifax and TransUnion.

One problem here is that some consumers may have very little credit, choosing to pay cash for their purchases. Employing wise money management may cost you financially as a lower credit score can result in higher auto and homeowners premiums, with no consideration given to what your earn. This isn’t fair, of course, but we do live in a world of credit.

Insurance Scores

Just as credit scores serve up a three-digit number, your insurance score does the same thing. That scoring range extends from 200 to 997, with 776 on up representing a good score. Scores of 500 or below put you in the poor score range with both your car insurance and your homeowners insurance premiums most likely coming in double reports the New York Times.

Insurers have another way of calculating risk. Two databases contain claim information: the Comprehensive Loss Underwriting Exchange (CLUE) and the Automated Property Loss Underwriting System (A-PLUS). Anything that insurers want to know about your claim history can be easily found.

Reporting Errors

With your credit reports playing such a significant role in determining two very important scores, the information found in each report should be correct, right? Unfortunately, facts tell us otherwise.

The Federal Trade Commission in a December 2012 report to Congress found that 26 percent of the 1,001 participants in an FTC study reported finding errors in at least one of their credit reports. These consumers reviewed 2,968 credit reports with 19 percent or 572 reports disputed.

Of the reports disputed, 399 had a modification made by the respective credit reporting bureau with 195 consumers reporting a credit score increase following the adjustment. Of the 195, two thirds reported an increase of 10 points or more — what might seem like a small number, but one that could have far reaching consequences for some insurance shopping consumers.

Reports and Scores

By law, consumers are entitled to receive one free copy of each credit report annually. Your free reports are available at AnnualCreditReport.com, a website that was set up by TransUnion, Equifax and Experian. Obtain copies of all three reports and if errors are found, following the reporting bureau’s instructions on how to file a dispute.

You can also obtain your credit score for a fee. A visit to MyFico.com will give you that score.

What about your insurance score? Is that information available to consumers too? Yes it it is. If you visit the Lexis Nexis site, you can obtain separate home insurance and auto insurance scores. Moreover, you can also obtain free CLUE reports that offer a seven-year history of the losses associated with your personal property or automobiles.