Keeping Your Car Insurance Affordable
Posted By on November 5, 2009
It can be very difficult to find the best premiums for car insurance. After all, car insurance companies do not make their methods of calculating premiums public knowledge. However, while you may not be able to figure out exactly what factors insurance companies are weighing, it is known that your credit score plays a significant factor. This is because studies have shown a connection between your likelihood of filing a claim and your credit score. Insurers figure also that someone who has had the same credit accounts for a long time, and who pays bills on time, is likely a stable person, and less of a risk for driving poorly.
Note: Although your auto insurance risk score is not available for you to examine, it will be somewhat like your credit score. If you’ve had unfavorable activity on your credit score recently, it is best to wait a month or so for things to return to normal before purchasing auto insurance. Another factor in determining your premiums is your car itself. Most auto insurers have a system developed by Car Insurance Services Office that factors age, make and model that begins with the cost of your car and then adds in safety factors and theft statistics. Just like your “insurance risk score” this rating information is not available to the consumer.
Note: You can keep premiums down by keeping small claims down. If you’ve had items stolen from your car, such as a CD collection – file this on your homeowner’s insurance. Bad drivers will pay more in premiums – including you if you drive badly. You can pay up to 40% more after your fist at-fault accident. This is the industry standard, although not all insurance companies follow this guideline.
If you’re lucky, your insurance company may have a policy of ‘forgiving’ the first at fault accident. You should be aware of whether or not your company has this policy, but even if they do, don’t rely on it to bail you out. It’s better to not need it at all. Remember that you’re still responsible for your vehicle even if a friend or relative is driving it! That means that if they get into an accident, it’s as good as if you got into it yourself. So be careful about who you let borrow your car.
Each auto insurance company figures the worth of a vehicle in a different manner. All of them keep their own lists of car values (like the Blue Book list). Some companies may ask local car dealers what they’d charge for a particular vehicle. Gap insurance might be worth purchasing, as it might pay the difference between what your insurer will pay and what you actually owe. Keep any maintenance records you have, especially of oil changes and routine checks by a qualified mechanic, or special parts, or upgrades. These will be factors in figuring what gap insurance will pay.
If you feel that your car insurance company drastically undervalues your car, don’t worry, there are measures you can take to remedy the situation. Gap insurance exists for just such times, and will cover the other expenses your car insurance company is ordinarily unwilling to cover. It can make a big difference and save your neck when your bad luck places your damages at just a bit over the coverage your policy offers.
If you are the parent or legal guardian of a licensed teenager who will be using your vehicle, then you must remember to inform your insurance company of this. If he or she gets into an accident and your insurance company hadn’t been informed, they are entitled to charge you back premiums from the date the teenager became a licensed driver. You must also remember to officially cancel your policy in the event that you switch insurers. You officially notify them by informing them in writing of your decision to terminate your policy. Make sure you give the exact date you want coverage ended, or you may find yourself without any coverage, before your new policy comes into effect. This is easiest to do by calling them and talking with an agent. Once you have informed them they will send you a cancellation request, already filled out and requiring only your signature.
Susan Reynolds is the webmaster for a leading South African Insurance provider who specialises in Car Insurance.