5 Things You Should Consider Before Buying Auto Insurance
[1] There are many factors that can influence your premium.
Automobile insurance companies use many different criteria when accessing an insurance application, the whole application process from beginning to end is called the underwriting process. Every car insurance company has many guidelines regarding which groups of drivers that they want, if you are in a group that is considered to have a greater risk they will charge you more for your premium. The criteria are different for each company, this means that two companies that are comparing the same driver can arrive at two different conclusions because they use different algorithms to figure out the amount to charge.
When you apply the car insurance company will place you into a group based on how much money and/or claims it thinks it will have to pay out. The whole underwriting process is done by computer algorithms that very from company to company it will use the data you have provided and data from other sources to place you into a group. The computer software will look at vehicle records and data to see how many speeding tickets or accidents a driver has received in the past.
Most insurance companies will use an insurance history report to see whether or not the driver has made any insurance claims against the current vehicle or any previous vehicles, and how much the claim was for. It is good to note that any accidents and/or tickets only affect the amount of money you pay for three years, but many insurance companies will look back as much as five years when deciding whether they will give you insurance. If that was not enough most if not all insurance companies will look at your credit history as well to help determine which group to place you in.
[2]Your type of car affects the amount of money you pay.
The Highway Loss Data Institute (HLDI) puts together automobile accident reports and stats for almost all types of vehicles possible, Insurance companies will then use this information to help set the prices on your insurance premiums. The data that is provided by the institute contains all sorts of information that make your insurance quotes higher or lower; so its important to think about insurance when purchasing your next automobile.
Basically if you drive a car that that is safe and protects the driver/occupants of the vehicle well, you will pay less than if you where driving a car that costs a lot to repair if it where involved in an accident. Also if the model of car you drive is less likely to be stolen based on the statistics, the insurance company is less likely to have to pay to replace it and therefore your premiums would be cheaper.
[3] The difference in cost from company to company is HUGE.
If you have spent any time looking for insurance already you will notice that there are hundreds of companies to choose from and many make the claim that they can save you money by switching to them. How can so many companies make this claim – simple. Because of the sheer number of companies in the automobile insurance industry it is very competitive and more competition means cheaper prices and more companies specializing in specific groups such as Pensioners or new drivers. What does this mean for the customer? Shop around and get as many quotes as you can because as mentioned previously the more quotes you get the more likely you are to find a cheaper one.
There are some laws that set prices for the same policy in order to protect the consumer and stop price gouging. They have been approved by the state and can’t be altered by company representatives, this means wherever you go you will get the same price for the same policy. In order to get the best price, have a plan before you shop around and a clear indication of what your needs and wants are and then find out how the prices varies according to these.
[4] If you stop paying your policy you will pay more in the long run.
It is important to get insurance for each and every car you drive because as you purchase insurance you will get insurance history that companies value very highly. If you think about it a company would prefer someone with 5 years on no accidents then someone with no history at all or many accidents. Even letting your policy expire or lapse will affect the way the company views you as a customer, so when you want to buy new insurance always make sure you do it before you cancel your old insurance.
[5] You can be rewarded for being a safe driver.
Due to the amount of competition most auto insurance companies now offer discounts for safe and reliable customers. They offer discounts for such things as safe driver record, applying online, no claims records, safe care, anti-theft devices, early pre-payment. The key here is to shop around for the most rewarding policies available to you for having a safe driving record.
