Buy Car Insurance
If you want to buy car insurance you need to be aware of the following facts that your insurer will certainly not tell you.
If you have a good credit it means that you will pay less – almost all of the insurance companies will pull your credit report. Have you wondered why? Many studies have shown that there is a direct correlation between the credit score and the possibility that you will file a claim. The insurance companies knows that if you pay your bills on time and have had the same credit accounts for a longer period, it means that you are more stable in comparison to those people that frequently open and close accounts and pay their bills late. With the information they gather they will make you an “insurance risk score”, which is one important factor that will determine your auto-insurance rate.
The premium is directly affected by the car model – you will not have the possibility to obtain these numbers from the insurance companies and as a matter of fact, you won’t be able to get them elsewhere. What you need to know is that all insurers have a rating system for every single car make and model. Most of these companies use a system devised by the ISO – Insurance Services Office that starts with the cost of the car and then factors in theft and safety data. All of the cars are given a rating from 1 to 27 – the higher the rating on your car, the more you will have to pay.
Avoid installments by paying in full – you will be charged with “fractional premium” fees if you decide to pay your annual premium in installments. These payments are usually offered on a 6-month, quarterly or monthly basis. The more you break down this payment, the more fees you will have to pay.
Stolen and damaged personal items are not covered – you need to know that the stolen or damaged objects are not covered by your insurance company. You can however claim on your home insurance as most of them can cover smaller and less expensive objects, like compact discs for example. If you do carry expensive items, it would be best to inquire a rider to your home insurance contract. It is advisable to take a couple of photos of these expensive objects.
Bad drivers will pay – the standard in the industry is that your insurance costs will go up by 40% once you have had an accident. To give you a real life example, if the firm’s base rate is $400, your premium will go up to $560 which means that you will have to pay$160 more. The good thing is that some insurance companies have a “forgive the first accident” policy.
You will pay if your friend has an accident with the car – if you borrow your car to a member of the family or a friend, you will have to file a claim with the insurance firm. Similar as if you have had the accident, the premiums will go up immediately. In the situation in which your friend didn’t have the permission to take the car, you probably won’t be held responsible. However, if this friend of yours doesn’t have insurance or the damages to the car exceed your policy’s limits, the injured party will most likely come after you for property and medical expenses.
The “totaled” value might surprise you – if you didn’t know, almost all of the auto insurance firms do not use the standard National Association of Automobile Dealers or the Kelley Blue Book values. Each of these insurance firms uses their own proprietary list of vehicle values and the vast majority of them have specialized software for valuing cars. If you decide to disagree with the value determination of your insurance firm, there are a couple of things that you can do:
First of all, it is highly advisable that next time you get “gap” insurance which will pay the difference between what you owe and what the company covers. Second, if you are in the possession of maintenance records that clearly show you have had the car’s oil changed every 3,000 miles and the vehicle was checked on a regular basis by a mechanic, take these records to the insurance firm in order to show them that the car was in a very good state.
Third of all, get a couple of price quotes on replacement cars from different dealers and take them to your insurance company. You need to ask them for a couple of dealers that can sell you an equivalent vehicle for the value the company is claiming.
If none of the above work for you, the last alternative would be to go to arbitration or mediation. The latter involves taking your case to a neutral party in order to help you reach a compromise. The arbitration is a binding decision. Of course, you also have the possibility to sue the company.
Try to “stack” if you get hit by a motorist who is uninsured – the UM/UIM – uninsured/underinsured motorist coverage means collecting more than one insurance policy that you hold. Although most of the states won’t allow you to do so, there are 19 states where you can do it.
Adding a teenager to the policy until he/she is licensed – it is not obligatory to add a teenager to the policy only because he/she has reached the driving age.
Switching insurers – if you have decided to buy car insurance from another company you need to notify the current company in writing. If you don’t do so, the company will continue to send the bill and if you don’t pay it, they will cancel you for nonpayment which will certainly go to your credit record. For this reason you need to give them a specific date in order to avoid these problems. Once you tell them, they will give you a cancellation request which you will have to sign.
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