Consider Auto Insurance Rates When You Buy A Car
This isn’t old news, but the type of car you buy effects your auto insurance rates. The more expensive or high-performance your car is, the higher your premiums will be. Why? It’s because the cost to repair a luxury or sports car is often significantly more than it is to repair an economy car. It’s a matter of mathematics. Less expensive automobiles are not as costly to repair if they’re involved in an accident. For some higher-end cars and trucks, just to replace a side-view mirror could cost a few hundred dollars.
How Rates are Set
Car insurance companies refer to the Insurance Services Office (ISO) when establishing coverage costs. The ISO is a reporting group for the insurance industry that publishes a statistical manual that rates vehicles based on the manufacturers suggested selling price, its loss history (if the car is not brand new), and in some cases the vehicles safety liability and theft level. The ISO establishes a number between 3 and 27 for each vehicle. The number assigned symbolizes the comprehensive and collision cost/coverage of that vehicle. The higher the number, the more costly it is to cover that vehicle.
Now let’s look at a few examples. If you have a car that is considered an economy car, yet the specific make and model you have has a high theft rate (i.e. it is stolen more often than other cars on the road), the number the ISO establishes for the car might be high. For sports cars, the ISO number is normally high because the faster the car, the more prone it is to traffic accidents; and in many cases, the cost to repair high-performance vehicles is significantly more than other vehicles. Sport utility vehicles (SUVs) are also weighed as high-liability vehicles. That’s because studies have shown that SUVs cause more damage in an auto accident than a standard economy or sedan model. In this case, some auto insurance providers increase the liability premiums for high-performance cars and SUVs.
Before You Buy, Research
If you want to keep your insurance from skyrocketing, it’s a good idea to do some research before you hit the dealerships. For starters, ask your existing car insurance company for an estimate on a few makes and models you’re thinking about test driving. The quotes you get back will give you an idea of how much it will cost to insure those makes and models. Having those quotes in hand will also help you keep your spending under control by reminding you that you also need to consider insurance rates when estimating how much you can afford on a new car.
Your age, where you live, and your driving record all play a factor in the cost of your auto insurance. Of course, the ultimate factor is the type of car you drive. The difference between insuring a four-door economy car will be significantly less than insuring a high-priced sports car. So, if you’re shopping for a new car, remember to keep your future auto insurance premiums in mind. It will help you make a more informed and affordable choice.
By: Brad Stroh
Credit Scores And Your Auto Insurance Rates
nsurance is essential for both legal compliance and risk management. Not only are you legally required to have a minimum level of coverage; your policy can also protect your assets in the event you’re involved in an accident. But, car insurance premiums can often feel like a financial drain. What’s more, many consumers are unaware that their policy rates aren’t calculated based solely upon their age and driving record. They’re surprised to discover that their credit scores can have a dramatic impact on their rates. Below, we’ll describe how your credit score can be used to determine how much you’ll pay for your auto insurance policy.
The Mystery Of Insurance Scores
When car insurance companies calculate the rates on your policy, they use an actuarial formula that yields your individual insurance score. This formula uses your credit history to determine your score. Unfortunately, it’s not as simple as directly translating your FICO score into auto insurance rates. Instead, the formulas use your credit history to establish expectations about the risks associated with extending a policy to you. The rates that are attached to a policy reflect those presumed risks. Because the formulas are proprietary, it’s difficult for consumers to determine how large an impact their credit score has on their rates.
Credit Worthiness And Driver Responsibility
The reason that car insurance companies use your credit history to help determine your premiums is because they consider it a good barometer of your responsibility on the road. They feel that people who show a high level of responsibility in managing their personal finances will be similarly responsible while driving. This effectively implies a lower degree of exposure for auto insurance providers. By reviewing policyholders’ credit histories and calculating insurance scores, carriers can make reasonable estimations of the risk they assume when offering a policy.
It’s important to realize that every car insurance provider views credit worthiness differently. While some carriers will consider it to be more important that past driving history, others will only use it as a minor factor, if at all.
Controversy Over Using Credit Scores
Despite the auto insurance industry’s argument that a person’s credit score is an accurate reflection of how responsible they’ll be on the road, many consumers are critical of the practice. They point out that good drivers often have poor credit scores. They further contend that the ebb and flow of local economies can exert financial pressure on consumers. This pressure can cause trustworthy people to miss paying a few bills occasionally. As such, they feel that any correlation between a person’s credit score and the likelihood of responsible driving is unreliable.
Clean Up Your Credit For Lower Rates
The most effective way for consumers to raise their insurance scores (thereby, lowering their auto insurance rates) is to take measures to improve their credit scores. That includes paying bills before they’re due. If any accounts are in default, they should be paid or otherwise negotiated with the merchants. Credit card balances should be kept under 50% and no more than 3 cards should be kept active. Finally, review your credit report every year. Mistakes happen. When they do, they can tarnish your credit history. Identify them on your credit report and eliminate them.
While millions of people disagree with the practice of using credit scores to determine auto insurance rates, an increasing number of carriers are doing so. By being proactive in maintaining a clean credit history, you can enjoy lower premiums.
By: Kade Phillips
Students Auto Insurance – Students Auto Insurance Rates For Cheap
It can be very time-consuming to find an affordable students auto insurance. I found it very hard to find a reasonable students auto insurance that I can actually be satisfied with. I have searched everywhere looking for the best deals possible. I even tried going through my Yellow Pages phonebook to call each and every single auto insurance company in my area for the best students auto insurance rates.
Each time I had called to give them my information I was left disappointed because of the high students auto insurance rates they ended up giving me. I knew that I did not deserve to be getting this high students auto insurance rates because my driving history wasn’t that bad.
That’s when I decided to try several options that I had not tried before. I decided to go through a local agent in my area for a reasonable students auto insurance quote. I was able to get quotes within a quick amount of time despite the fact that my agent was pretty busy in the beginning. But still I was not happy with the auto insurance quotes I received from the agent. This was when I realized that going through an agent might not be the best option. Additional costs were carried onto my monthly premium that I did not expect.
This was something that I did not want. All I ever wanted was a lower students auto insurance rate. I got fed up and decided to just go online to look for auto insurance quotes on my own. I eventually came to find out that signing up at each and every single website took too much of my valuable time. Even though I got the students auto insurance rates I wanted by going online, my fingers got quite exhausted from doing the repetitive typing. This is when I found some car insurance website that gave me cheap students auto insurance quotes from as much as five top car insurance companies within moments.
This proved to be a great time saver for me. I used this to my advantage by going to these type of websites right before my auto insurance premium was to expire. Even though I still had to do some typing, it was more efficient by going to these types of insurance websites because I only had to enter my information once.
By: Craig Realton