10 Secrets Car Insurance Companies Don’t Want You to Know
At the lowest level, car insurance is the necessary evil for any driver, but navigating the world of car insurance can resemble a mystery. Insurance companies have their methods and practices, some of which they’d prefer to remain under wraps. Learn the insider secrets and you can save hundreds in premiums. Let’s get to know 10 secrets car insurance companies do not want you to know.
1. Your Credit Score Plays a Bigger Role Than You Think
Many drivers don’t know how much their credit score can affect their car insurance rates. Credit-based insurance scores help insurers gauge the risk of a claim being filed. Even with a clean driving record, if you have a low credit score, you can expect to pay higher premiums.
Tip: Regularly check your credit report for errors and work on improving your credit score to lower your insurance costs.
2. Loyalty Doesn’t Always Pay Off
Staying with the same insurer for years leads to discounts and favorable treatment, you might think. Unfortunately, insurers tend to employ a tactic known as “loyalty penalty” or price optimization. What this means is that they’ll charge you more over time, on the assumption that you aren’t very likely to shop for better rates.
Tip: Request quotes from several insurers each year to make sure you’re getting the best deal.
3. Accident Forgiveness Isn’t Always Forgiven
Some insurance companies offer something called accident forgiveness which they advertise as a way for you to protect your rates in the event of a collision. But this feature often has fine print attached. For example, it may only apply once, and you might be paying for this benefit through higher premiums.
Tip: If you have an accident forgiveness policy, be sure to read the fine print to know what limitations apply.
4. Higher Deductibles Can Save You Money
Due to fear of high out-of-pocket costs after an accident, many drivers choose low deductibles. What they don’t know is that raising your deductible can tremendously reduce your premiums. If you’ve got a safe driving record, this trade-off instead may work in your favor.
Tip: Consider your driving record and financial circumstances before committing to a higher deductible.
5. Bundling Doesn’t Always Guarantee Savings
Insurance companies frequently pitch the idea of bundling your auto policy with another insurance product, such as homeowners or renters insurance, as a path to savings. Bundling can get you discounts, but it’s not the cheapest option every time.
Tip: Seek quotes not just for your separate policies but also for bundled ones to get a total cost comparison.
6. Your Job and Education Can Influence Your Rates
Did you know your profession and education level could impact your car insurance premiums? Insurers rely on this information to evaluate risk. For example, professionals such as teachers or engineers may pay less because they’re viewed as more responsible drivers.
Tip: Answer honestly regarding your occupation but investigate whether changing job type could have a positive difference on your rates.
7. Low Mileage Discounts Aren’t Automatic
If you drive relatively few miles each year, you’re less likely to be involved in an accident, classifying you as a lower-risk driver. Insurers, however, don’t always automatically apply low mileage discounts.
Tip: If how much (or how little) you drive changed during the pandemic, let your insurer know — particularly if you’ve driven far less than before.
8. The Kind of Car You Drive Matters More Than You Know
Autos are among the largest and biggest variation of the premium price car insurance is based on the make and model of the vehicle. So do high-performance cars, luxury vehicles and models that are prone to theft, which usually cost more to insure.
Tip: Research the insurance costs of a car before buying it to avoid surprises.
9. Not all claims affect your premiums the same way
Many drivers believe that any claim will increase their rates, but that’s simply not true in every case. Small claims shouldn’t cause a rate hike, particularly if your insurer has a no-claims bonus or accident forgiveness scheme.
Tip: Calculate whether the value of a small claim is worth the risk of a premium increase before filing one.
10. You Can Negotiate Your Rates
Not many people know that they can negotiate with their car insurance provider. If you’ve been a stickler for the rules and you’ve been loyal to your insurer, you could have some wiggle room to request discounts or lower premiums.
Tip: Call your insurer and request a rate review. Promote your good driving and any change in behavior that would merit a discount.
Conclusion
Car insurance doesn’t need to be confusing. Knowing these 10 secrets can help you negotiate the system with confidence and save big on your premiums. Keep in mind to shop around, read the fine print and ask questions to make sure you’re getting the coverage you need at a price you can afford. If your insurance knows things about your family history, illness experience and the medical record itself, you are in a better position to avoid the trap of taking a lot of money from insurance companies.