- Education and Science»
Car Insurance Tips to get a Good Rate!
Now that's Style!
King Papa does Car Insurance???
I was in the Car Insurance industry for many years, I decided to create this hub as a way to educate people on the basics of what their coverages are and some tips on how to save money. Some of these tips are insider information and bend the "rules" of what your company doesn't want you to know. Nothing illegal of course, just small tips on how to trim up your policy.
Insurance is built on a system of trust, the company hopes you don't lie to them, and they provide a ethereal product, car insurance isn't "real", like your car is real, it's an agreement that they will provide $$$ for you in the event of a covered loss. That's what your buying, trust. Companies are rated on their credit worthiness i.e. how much money they have and how able to pay out on their claims they are. This credit rating system is important in today's economy, we all saw what happened to AIG. The credit rating of a company is their report card, this is important because of that trust you are placing in the company. You wouldn't want to get an IOU if you were in a serious accident :) Car insurance is required in most states now, which is a good thing. Without getting too political, uninsured motorists affect other people, not just themselves, so this is a good example of the government requiring people to carry insurance. I am licensed to write insurance in all 50 states, but would only consider myself an expert on 48 on them. MA and NJ have some of the craziest laws ever written, so this post isn't necessarily applicable in those states.
Things that effect your rate:
Accidents, claims, tickets, age, marital status, gender, type of vehicle, continuous coverage, etc. There are more, but these are the big ones.
Things that don't effect your rates (myths)...
Color of your car, parking tickets, not at fault accidents, natural disasters, etc.
This is where I cover how to bend the rules. If you have any moral objections to this post, that's fine...dont follow what I'm writing here. But dont judge me too harshly either, none of these tips are necessarily illegal. I simply dont agree with some practices of these companies and will do most anything possible to help people avoid getting screwed by "the system". For example, I am not married. I could be flawless in every other rating category, but still not get the companies' best rates because I'm not married. Statistically married people may have less accidents or tickets, but I already dont have accidents or tickets...why should i be punished?
When you first call for a quote, insurance companies ask if you have current coverage. This shows that your are responsible and keep continuous coverage. There are many legitimate reasons why a person may not have coverage and it doesn't mean that you are a higher risk. Also, review your families policies carefully; you may be listed as a driver on someone else's policy which does count as legitimate coverage! If you tell a company that you have insurance, they may ask for proof, most companies don't.
If you tell your company that you are married, they will require you to have a family policy. This is good if you both have decent records, you get a married discount. If your spouse however has a crummy record, that can ruin your rates. I DO NOT RECCOMEND THAT YOUR SPOUSE DRIVES UNINSURED, just that in some cases it is better to have separate policies. There's no reason to pay for a driver twice. Tell them you are separated, some companies may require proof, most dont.
If there is someone in your household that you don't let drive your cars, spouse or not, ask your company about an NDE. A Named Driver Exclusion is perfectly legal and is available in most states. It says that the person listed WILL NOT drive your car, and if they do, they have no coverage. A good option for stubborn companies that won't remove someone from your policy, but risky if they ever do drive your vehicle.
Permissive use. All auto contracts come with what is called permissive use, it means that anyone you give permission to drive your vehicle has the same coverages you have. In some cases, there's no need to add someone to a policy if they drive occasionaly. Don't try this with your spouse unless they have other coverage elsewhere, they can cancel your policy. Also, keep in mind that any claims on your insurance can affect your rates even if it isnt you driving!
If a company asks about tickets and accidents you can tell them you dont have any. Some companies don't run a full motor vehicle report on you, most do, but they dont necessarily show tickets from other states. Dont volunteer information if you dont have to.
Be very careful how you word things to your company. Think about what you say before you say it. For example, if you hit a large rock in the road, it's considered at fault because you are supposed to be able to avoid it. However, if an object falls off of a truck, it's not at fault. don't slip up and say something wrong, insurance companies will do everything they can to not pay out or raise your rates!
The Bottom Line...
Generally companies are honest, as you should be too. These tips are given to make sure you are an informed consumer. Again, if you don't want to lie to a company, don't. Just use this information to ask better questions: "Are you charging for x?", "Is there a fee to pay monthly?", "Does that affect my rates?", etc. Ask your company if they offer any other discount, vehicle safety features, defensive driving credit, good student, etc.
Most importantly, shop around!!! Insurance rates are proprietary information, like your credit score, meaning that each company charges rates based off of their own unique, patented criteria. The only way to know what a company is going to charge is to get a quote. The insurance company of your parents (where you stay with one company for 40 years and your rates get better each year) isn't around anymore. People switch companies all the time! Do your research and find out a few things about the company; like if they pay their bills. If they are a good company and are cheaper, switch!