12 Tips for Better Car Insurance Rates – What Your Insurance Carrier Will Not Tell You

     Just about everything in life has a “catch” including car insurance. There is a tossup between great customer service and making money. Should your auto insurance agent tell you about how to get better rates beyond something like – do not get into an accident? Who knows so we have compiled a list of tips that could save you $1,000’s in insurance premium payments over your life time if you follow some or all of them.

     1.    Better rates come with better credit. This might not be something you would know, but insurance companies have found out that folks with higher credit scores file less car insurance claims than folks with lower credit scores. The logic here is this – credit scores indicate timely credit account payments, the length of time you have had credit accounts, the amount of opening and closing of accounts etc. All of these things suggest your stability. The higher the credit score the more “stable” you are which translates into lower insurance premiums. The key: improve your credit scores for better insurance rates. For more information on how to improve your credit scores visit this article: 7 Tips for Raising Your Credit Scores.
     2.    The payment plan you choose can cost you. There several ways to pay your auto insurance premium: annually, semi-annually, quarterly or monthly. Most of the time, insurance carriers charge you an extra fee as you break your payments down from lump sum to paying monthly. When you can, pay your insurance in one lump sum to save a little extra money.
     3.    The type of car makes a difference. The type of car you want to buy will have an effect on your policy expenses. Most carriers will tell you over the phone if you are purchasing an expensive car to insure or not. All you have to do ask.
     4.    This one is simple – the higher the deductible the lower the premium. The deductible is the amount you have to pay when you file a claim. For example if you have a claim for $2,500 in auto repairs due to a fender bender and your deductible is $500 you will have to pay $500 towards your repair bill. Your insurance company will pay the other $2,000 in this case.
     5.    Some things are not covered. Expensive electronic equipment or the precious Eric Clapton “Unplugged” CD set that you just cannot do without is not covered by your insurance policy if it is stolen or damaged in an accident. To get this covered you’ll need to talk to your home or renter’s insurance holder. Make sure if you have expensive equipment in your automobile that you take pictures of the equipment and store them in case you need proof that the equipment existed.

     6.    Bad driving is expensive. It seems a little against the grain – we get car insurance to cover us financially in case of getting into an accident yet filing a claim or too many claims increases our insurance rates and quite possibly could terminate our policy. If you are found “at fault” it is standard that most carriers will increase your rate by as much as 40%. Other companies have a policy where they “forgive” your first “at fault” accident. Make sure when you are shopping around that you ask about these policies.
     7.    Loaning your car can cost you too. Because it is your vehicle, if you loan your car out to a friend and they get into an accident, you could have to pay for damages that exceed your policy limits for medical and property damage. Again, check with your carrier to see what their policies are about loaning your car if you are planning on doing so.
     8.    Watch out for totaled car values. This is especially important if you financed your vehicle. When you “total” your car, your insurance company is going to come up with its own interpretation or estimation of the value of your car. Of course they do not know exactly what it is worth given how well you take care of it, or the upgrades you made to it, so they will use every “general” estimating tool they can to determine a value. If you do not like the value, you will have some time to come up with your own value to present to them (in some cases it could be as long as 2 years). If necessary, provide them with your service records, any pictures of the car before the accident. Also, get your own estimates to repair and to replace your car to give to them. If you can provide a good case for a different value than what the insurance company comes up with, they might work with you, especially if you have been in good standing with them. You might even have to present your case to an arbitration process where a third party determines what value should be paid by the insurance company. If you go to arbitration or mediation, make sure you have your facts together and present a good case. Arbitration is usually final. You can take an attorney with you to arbitration to represent you.
     9.     If you financed your car and you are in an accident that results in a total loss, it is possible that you could still have a payment due on the loan that you bought the car with. If this is the case you can determine your own value of the car and present that to your insurance carrier (see item 7 above). To prevent getting stuck with a payment on a car that you no longer have due to an accident or some other reason like trade in on a lease you can purchase GAP insurance. This insurance will pay the difference between what your insurance carrier values your car at in a total loss accident claim versus the amount that you owe on the car.
     10.    Compensation for diminished future value. In some cases you can get compensated for the “diminished value” of your vehicle that has been in an accident but is now repaired. This is not clear cut from state to state about your ability to make this claim so check with your carrier about their policy and your state laws.
     11.    You might be due sales tax relief from your state if you have to replace your totaled vehicle with a new one. Make sure to make the request of your insurance company for a sales-tax reimbursement you may or may not get it. More than 50% of the states in the US offer it and carriers in other states might give it to you anyway in an effort to “restore you financially to where you were before the accident.”
     12.    The last tip that we cover is cancelling your policy. It is your responsibility to stop your policy if you are not going to renew it, or if you get a new car etc. Insurance companies work under the assumption of you need insurance and will be covered unless they are otherwise notified.  If you switch insurance companies and do not tell your previous company and you come up to a new premium/billing cycle you will get another bill. If you do not address this bill thinking you just do not have to pay it, think again. Do the right thing and call the company to cancel. The insurance company has to assume that the vehicle that was in your policy with them is still a valid vehicle needing insurance. They will cancel your policy for nonpayment which goes against your credit rating as well as your ability to get additional insurance with another carrier. Your rates could even go up if this happens, so do the right thing and call your old company to stop your policy.

     Insurance is an important fact of life. Hopefully you will not use it, but if you do, make sure you keep it current and in good standing. The minute you let it slide is the minute you will skin your knee.