What’s with all the mystery? Fred and Marcy live good down the street and they pay less than I do for their auto insurance premiums. Why is my rate so different?
To most people the way insurance companies calculate premiums seems completely random. Let me assure you it is NOT. Insurance companies spend millions of dollars calculating and weighing a plethora of factors trying to choose “risk” and then assigning a cost to it.
Knowledge is power. Once you understand what factors auto insurance companies are using to settle your rate the more power you will have over the premiums you pay…
One of the most obvious reasons you might pay more is if you have tickets or accidents. You are considered a “higher risk.” Even if you did not receive points for a ticket it is still a factor. If you are shopping for insurance and you do have accidents find out from your current company if they were considered at fault or not at fault. If they were not at fault they will not count against you. However, if they were considered at fault find out what percentage you were found to be at fault. Chances are if you were less than 50% in the wrong it will still affect the premium, but it won’t be “surchargeable.” Additionally, most companies will also consider how much was paid out to choose if there is to be a surcharge.
Location, Location, Location…This is one of the biggest factors affecting price. Insurance companies use statistics to show which areas are at higher risk for “claims.” These claims include accidents, grand theft auto and vandalism. As a general rule rates in the city will always be higher than in the suburbs and surrounding areas. Your Agent will be able to tell you if you are in a higher rated area. The solution here…is move! Maybe it’s time to buy that house in the country.
The type of vehicle you drive will affect the price. A sports car will likely be more money to insure than a family sedan. Foreign cars can also carry higher premiums because of the additional cost of parts and labor to repair them. In general the more expensive a car is (the actual cash value) the more money it will cost to insure because in the event of a total loss the more money the insurance company has to pay out. Additionally, some models may be less expensive to repair in a collision claim, but carry a higher risk for bodily injury. The solution here is to do your homework before buying your next car. Check out the Insurance Institute for Highway Safety (IIHS) for its “Top Safety Picks.” You could also research the Highway Loss Data Institute (HLDI) they analyze the cost to insurance companies from theft and collision claims. The NICB, National Insurance Crime Bureau, will also show you the top 10 vehicles most likely to be stolen. Understand that if your car is on that list your premium will reflect that additional “risk.”
Your age is also a determining factor. Drivers under twenty-five will be the most costly to insure because statistics exhibit they are at greatest risk for tickets accidents. Most companies will however offer significant discounts for students with good grades and youthful drivers who have completed driver training programs. Drivers over fifty may be eligible for a discount, but be ready for that rate to go up again once you reach seventy-five.
One final factor to consider is mileage. The more miles you drive your vehicle each year the greater propensity for accidents simply because of the increased exposure. There are many ways to combat this issue …try walking, riding your bike, car pooling or taking public transportation. All of these will not only save on your insurance premiums, but they will sever wear and tear on your vehicle, save gas money and they are better for the environment.
Finally, as always find an insurance agent you can trust. They will be your best resource to understanding your individual rate.
Filed under Eastwood Auto Insurance by on Mar 13th, 2011. Comment. 
There are a few things in life that are certain. Death, taxes, and if you drive, car insurance cannot be avoided. Here are some things you can do to cut your auto insurance costs.
1. Raise your deductible to gash your Auto Insurance costs: According to the Cleveland Insurance Agency, “increasing your deductible from $200 to $500 on collision coverage could reduce your cost by as much as 30 percent.” While you will have to pay more out of pocket should you have an accident, effect reduction in your insurance bill will more than construct up for it. Plus, if someone else caused the accident, their insurance company may reimburse you for the deductible.
2. Drive less to cut your Auto Insurance costs:OnlineAutoInsurance.com reports, “the less time that a person spends on the road, the less likely that they will be involved in a traffic accident and cause a loss to their provider”. For that reason, you car insurance will be less if you reduce how much you drive. Don’t forget to report to your insurance company that your mileage has decreased or they won’t know to cut your rates.
3. Bundle your policies to cut your Auto Insurance costs: According to DMV.org, you can bundle car, homeowners, health, property, rental, and/or life insurance policies for much lower rates. Don’t just give one company all of your business though. Do your homework and ask several carriers for quotes, measuring what each will cover versus what they will cost.
4. Pay your bill in full to slash your Auto Insurance costs: Car insurance companies used to charge a lump sum twice a year to cover your car. Eventually they realized that they could charge extra processing fees each month if they aloof monthly payments. Progressive Insurance reports that if you make one payment when you purchase your policy, you get discount and don’t pay fees.
5. Improve and evaluate your credit rating to cut your auto insurance costs: An error on your credit describe could mean a lower credit rating and higher insurance premiums in all states except California and Georgia. According to USInsuraneonline.com “The insurance industry keeps statistics on credit ratings and insurance claims and, based on these statistics, they have found in general that the lower the insurance credit glean, the more likely you are to file claims, exaggerate the claims you file, and perhaps even commit insurance fraud.” Therefore, they will charge you higher premiums to compensate.
6. Crack down on your teen to cut your auto insurance costs: Edmunds.com reports that “16-year-olds get into accidents almost six times more often than drivers between the age of 30 and 59″ To get your insurance rates lower, your kids will need to have a “B” average in high school or college. Have them earn a young driver discount by taking fine driver classes. They should also leave the car at home when they go off to college. If your teenager feels this is too much to ask, make them pay their own auto insurance.
Filed under Farmers Insurance by on Feb 24th, 2011. Comment.
hazard by definition is when one is protected from risk, owning insurance for example, who acts differently if they did not have that protection. The existing problem of right hazard is usually found in the insurance industry, and it is a constant wretchedness for insurance companies that by subsidizing uncertain actions, that people are encouraged to take more risk. For example, a car owner with auto insurance may drive arrangement over the speed limit knowing that if he gets into an accident, the cost of repairs will be covered by insurance. These same principals in insurance claims can be applied to large corporations. “These entities will now be so large that it’s virtually unthinkable to let them fail,” said David Ruder. These companies know that they are the backbone to out economy, and that the government would not let them go under. This means that the American taxpayers will be the ones bailing out the companies when they make financial mistakes. If a company believes that it will get bailed out, decisions with more risk will be made in order to maximize profits. Although the aftershock of a mega company failing may be more costly than impartial bailing out the company, the government needs to step in and create regulations to reduce moral hazard. “The thing that makes me so mad about this is that Congress has been so quick to spend taxpayers’ money on these companies, yet they’ve been so slow to change the rules that got us into this situation,” said Christopher Paulson. When the Federal Reserve bailed out Bear Sterns, it created a moral hazard around the board. “There’s no demand that the moral-hazard quiz exists with banks this large,” Ruder said, and this notion needs to be reversed by letting companies fail.
Letting companies fail, and giving them no hope for a bailout will nearly eliminate proper hazard. Without the government backing up companies, the corporations will be responsible for their beget mistakes. This would be true anti-government regulation which would lead to a more free-market. In an ideal free-market, large companies would be able to fail, just like many small businesses do. However, after the recent meltdown, the government did not seem inclined to let the major banks fail, so a right free-market does not exist. The American tax payers in this case we the involuntary insurers who bailed out the companies. Combined, the taxpayers acted like an insurance company, but unlike a real company, they tax payers did not profit, or gain anything from the bailouts.
Henry Paulson, US Treasury Secretary, claimed that taxpayer money would not be used to bail out companies. Barely 48 hours later, the insurance giant American International Group Inc (AIG) was considered to big to fail, and was in need of a government bailout. However, all arguments have their weaknesses, and I believe that AIG was the one company that actually was too big to fail. They had a huge role in financial insurance contracts for obvious types of investments. The problem for AIG was the credit-default swaps, which AIG had to cover the losses for billions of dollars from the plummeted risky investments. If AIG were to go under, the company would have to default on all of the insurance claims where investors all over the world would lose money. AIG is expected to sell some of its assets in order to repay the large amount of debt. Later on, when Lehman brothers went under, they were not bailed out and were force to express bankruptcy. There was also Bear Sterns which got bought out by JP Morgan Flow who was given $29 billion to buy out the company. Fannie Mae and Freddie Mac were both in trouble, and $200 billion was given to them. These bailout injections continued and were given to numerous companies on the financial district.
As for the US government, they have been working to secure and stabilize the market since the start of the meltdown in 2007. A large plight that needs to be dealt with is the fact that debt level-headed by companies was highly inflated. The value of these inflated assets was kept high by the assumption that prices would continue to rise, and that the assets could be sold at a high value than they were purchased for. Now with the market lowering back to reality, firms are being crushed by the losses. What the government is doing is injecting currency to prevent hyperinflation. By lowering the value of money, the price of worthless assets will be kept high. Another thing the government can do if change the banking system and apply modern regulations. Right now, being “Too big to fail” seems like a reasonable clause, but that should not be the case. The way things are set up right now is that if one bank goes down, other banks have deposits within that bank, so one bankruptcy could lead to the domino effect. A possible epidemic that could happen is when one giant bank goes under, this could cause panic across the board, and would cause people to withdraw their savings from all banks like in 1933. This would end up completely freezing the financial system. During the 2008 meltdown, the government directly bailed out banks to keep them afloat. However, I believe that companies should be allowed to fail, and the bailout money should be directly to the banking customers or depositors. It was the banks faults for playing in the market of dangerous short term credit default swaps.
Filed under Mercury Auto Insurance by on Feb 22nd, 2011. Comment.
I absolutely loathe paying for car insurance. Unfortunately, it is something that every driver must have. Even if you don’t care about your safety or the safety of others, the law still requires that you must have car insurance in order to drive. I also loathe insurance salesman. I always feel like they’re trying to get me to select the most expensive policy, which I’m certain they are. That is why I use Progressive for my auto insurance.
I used to spend hundreds of dollars a month on auto insurance. I felt like I could barely afford it. Then I discovered Progressive. Progressive makes it so easy to purchase and pay for car insurance. You can do everything directly from their website. You never even have to command to a sales person. In fact, you never have to speak to anyone from the company. You can literally do it all online.
Every six-months I go to the Progressive website, enter in my personal information, and create my acquire custom insurance policy. Now I only pay $100 a month for car insurance. Every month Progressive automatically deducts my monthly payment, so I never have to worry about paying on time as long as I have money in my checking account. Progressive will also allow you to pay for multiple months in advance at a discounted rate. For example, if I paid for all six-months of my policy at once, instead of paying $100 per month, it would only cost $549.
Progressive will insure just about anyone, too. A few of years ago I was dropped from State Farm insurance because I was in a couple car accidents (isn’t that why I pay for car insurance?!). Well, I had a lot of concern trying to find a new insurance company. Most companies wouldn’t insure me because I was dropped from my previous company. When I went to the Progressive website, I didn’t have any problems. I did have to pay a slightly higher rate for my first six-months, but after that my rate went back down. One time I was even dropped from progressive because I missed a payment (I wasn’t using direct deposit then), but I just went back to the website and signed up again.
No matter what insurance company you are using, you should switch over to Progressive. They perform everything so easy and affordable. Even if you are completely content with your insurance company, you should at least go to the Progressive website and score a free quote. I’m obvious it will probably be a lot less than what you are paying.
Filed under Mercury Auto Insurance by on Feb 19th, 2011. Comment.
Since the mid-1990s, insurance companies have tightened their eligibility requirements for new policyholders. In addition, the entire insurance industry has bound together to relay information between them. Allstate Insurance has just as much vested interest in the information contained in these reports as Nationwide Insurance and other leading carriers do. This is all to withhold policyholders from being dishonest or simply inaccurate regarding their insurance history. Each secret below is no secret to the insurance carrier you’re getting a quote from.
Secret number one
Standard insurance carriers run credit checks prior to giving you an auto insurance quote. These are referred to as Financial Responsibility Scores. The insurance agent can’t view the report but rather it goes through the system and simply tells the agent whether or not you are eligible to be written in that company. If you are not eligible, you can still get a quote but it will be with a higher rate. Although these are not the same credit reports as when you apply for a loan, the report does affect your eligibility and your rates.
Secret number two
Any claim you’ve submitted in the past 10 years is visible to anyone in the insurance industry. Insurance companies have developed reporting procedures to inform each other of claims called an Auto loss history narrate. If you’ve submitted many small claims or even one big claim, you’ll either be charged more or you won’t be eligible for a standard policy at all.
Secret number three
There could not be a more important secret. Never, ever let your insurance cancel. The most steadfast rule in the insurance industry is proof of prior insurance. If you are uninsured for over 30 days, you can bet on higher insurance prices for at least the next year. Not only will being uninsured put you into a higher premium bracket; you may have to discontinue there for a period of time before the company will consider lowering your rates.
Sure, there are benefits to keeping your business with the same company for several years but it’s also good to shop and compare pricing. By keeping these three things in line, you’re more likely to get the best rate possible.
Filed under State Farm Auto Insurance by on Feb 17th, 2011. Comment.
