Monthly Archives: September 2013

Low Mileage Car Insurance Discounts

There are many reasons why many motorists may be driving only few miles a year. It is not easy to let go of an automobile as it represents independence and option to pick up the keys and drive away. It does not matter that we do not use this option often. When many senior drivers are asked in a survey they said that they want to be able to drive very late in their lives. Simply because they do not want to feel like stuck in the house and cannot get out.

Looking at Your Driving Habits and Lifestyle

Generally work affects how many miles people drive. People who are working long hours and weekends in the cities do not have much time to use their cars. They have convenient public transport and constant availability of taxis. When they like to go away they usually like to go very far away. It is still highly likely that they keep a car around. Considering how expensive it is to insure a car in the city they can save a few hundred dollars by driving less than 7,000 (or 10,000 for some companies) miles a year.

Again, car insurance is expensive for young and older drivers. Young drivers can save considerable amount if they are not driving much. If they are living in a college campus they are unlikely to use their car to go to lectures and back. Even in their free times students do not go far out of the campus.

The same is true for elderly drivers. They keep cars around only for going to doctors’ appointments, do grocery shopping and few errands around.  Most of them do not take a long trip because of their health and medications. They do not go out during rush hours and at night. They too can save money on their expensive vehicle insurance premiums.

What Are the Cutting Off Points In Which Car Insurance Rates Changes?

Usually under 3,000 miles is for occasionally used cars like classics or seasonal cars like open cars. They normally manage to get really reasonable rates due to their occasional usage. Driving under 7,000 miles a year can save you between ten to fifteen percent. Usually the premiums start picking up after 12,000 miles. Nearly eighty percent of motorists drive between 7,000 to 12,000 miles a year. Once you go over 25,000 miles a year you are seriously on the road and start seeing its effects on your premiums.

Enlightening Your Auto Insurer with Accurate Mileage Details

As mentioned above your work can dictate how many miles you will drive with your private car. If you are in the sales business and making the calls on your own vehicle you can cover a few thousand miles a year. This may not be a problem if your company is paying allowance for using your own vehicle. Also, you may have a company car which you can take home to complete the commute. In such case, your own one may be sitting in the garage most of the time. Work out how often it goes out and how many miles it travels each term.

It is worth getting the mileage right as many companies do their own estimates based on your occupation, background and commute distance. They may have been over estimating your mileage. If we look at the above salesman example, they may have estimated a high mileage for you. However, you would not be driving anywhere near to that with your own automobile if the company is providing you with one.

Remember that there are variations as to how companies look at the mileage. Some companies consider below 7,000 as low mileage while few of them may have this number at 10,000. It is always worth checking what the position is and you should never buy insurance or renew without getting alternative quotes.

Insuring Materially Modified Automobiles

Many motorists make changes to their cars. Most of these changes do not bother auto insurers and it is not necessary to tell them. Changes in interior decoration or audio system are not really important unless they cost you a lot and you like to insure them for possible losses explicitly. Remember auto insurers do not usually cover any portable item or equipment.

A material change is the one that will affect performance of the automobile, increase possible damages to other vehicles and passengers in case of crashes or reduce the protection provided by the original auto. In short, anything that will increase the risks accepted by the insurer in the first place. Changing the seat covers, floor mats, stereo and likes are not considered to be material.

Installing a brand new and especially larger engine, adding or taking away auto body parts, and modifying suspension, tires and exhaust are some of the material changes. There are people who redesign the whole car with new and modified parts. For example, they use the main body of a vehicle and change all the other parts including doors and exterior body with lighter material like fiberglass.

Then, they install a sports car engine to this lighter body to make the car go even faster. You can straightaway see a few serious problems with it. First of all, it is now a sports car regardless of how it looks. In fact it may need to be re-inspected by auto licensing authorities for safety and new license plate to be issued for it.

The second serious problem is that while taking out the heavy parts the safety features like airbags and seat belts can be disturb or taken out that makes the automobile less safer. Now, it is lighter, faster and more harmful to the driver and passengers. This may be exactly what the owner was aiming to achieve but this is not the car that has been insured in the first place.

The reason we have given an extreme example is to demonstrate how the insurance contract would have been broken with such changes and make policy null and void. In other words, you have a very little chance of any damages being paid should you fail to inform the insurer before starting to drive such automobile.

If you were to make similar changes as our example some insurers may refuse to carry on the cover when you tell them what you did to the car. This will force you to find alternative insurer. That is why it is important to discuss possible changes you are planning on doing. This will allow you to make alternative arrangements in time and find the best way of insuring after modifications.

Unfortunately the losses would be double should you neglect to tell the insurer in time and pay whatever additional premium required. By arranging an appropriate new policy or make changes to existing one you make sure two things. First of all you make sure that damages to original car will be paid. Secondly, your new investment on the car will be protected.

All those extras, changes and parts costs money and this requires you to arrange a higher valuation for your automobile based on the new look. You can do this in two ways. Either you could agree a valuation for the end product (the modified car) or add extra coverage for the parts installed as an endorsement.

What you have in mind may be much simpler and you may not have to pay a lot extra in terms of premiums. So, talk to your insurer so that both parties are clear on where they stand.

Insurance Implications of Friends Driving Each Other’s Cars

Most of us do not think much of picking up the keys of our friends’ or relatives’ automobiles. In the same way, we may not think twice before generously handing over the keys to our own cars. Maybe it is a good idea to have a look at the implications as to what would happen should there be an accident. There is a possibility that our friendship may not stand up to the strains an accident with a friend’s car can cause.

Insurance Implications of Lending Your Car to Occasional Drivers

We should first look at what would happen if we borrowed our car to someone of a chance happening. Most standard automobile insurance policies would not have a problem with covering this driver for this occasional borrowing of the insured vehicle. Quite a few policies would have a condition stating that anyone who drives your car must be at least 25 year old and has a valid driving license. This way, insurers can have some sort of control over who can drive the insured vehicle. They consider young drivers to be high risk and therefore they exclude them for even a short few hours.

Some cheaper or non-standard vehicle insurance policies may exclude any other driver unless except they are listed on the policy. There is a high chance you know this condition before you bought the policy. It is a way of bringing the premiums down and many people voluntarily take this option. So, first you should familiarize the terms of conditions on your policy about occasional drivers.

One point to keep in mind is that usually auto insurers do not consider people living with you to be occasional drivers in this sense. They like to know who else live with you over the age of driving. They would take a note of them even though they are not listed on the policy. It would make sense to include them on your policy to clarify the position. Normally, it would cost nothing or not much to include drivers over the age of 25 with good driving records to be included on your policy.

Borrowing Someone Else’s Automobile and Insurance

We now know that insurance usually go with the car from above context. When your friend lends you his vehicle he should have insured it for your use as well. To make sure you can ask if that is the case and you would be insured while driving the auto in question. Normally owners are supposed to insure their cars properly and control its use.

You cannot insure someone else’s car although there may be exceptions in the case of partners living in the same house. It may not matter who owns the car and either partner may be able to insure it. As an outsider you can only buy insurance for others’ cars in two ways. You may be able to extend your liabilities insurance with your own car to include accidents you had with others’ vehicles.

Secondly, you may be able to buy non owners auto insurance to cover liabilities arising from driving cars belong to others. Non-owner vehicle insurance normally only covers liabilities. In both arrangements we are only talking about excess liabilities. The first call of third party claim payments would still be the insurance of the vehicle’s owner. Should he/she not have insurance, have insufficient coverage or damages go well beyond the limits of owner’s policy your liability insurance arrangements kicks in.

In some cases, people may choose to sue the driver separately. This would be the case if they consider you negligent in the accident. Then you would feel lucky that you have own liability coverage. It is always a smart decision to buy sufficient amount of liabilities coverage especially in this age of litigations and ambulance chasing lawyers.

Young Driver Car Insurance Coverage

Sometimes we see articles or videos suggesting that it is almost impossible to find car insurance policies for teen motorists. This is not true as there are companies willing to insure young people at reasonable rates. Remember that today’s young and high risk drivers are tomorrow’s mature, careful and highly profitable low risk drivers. Some companies like to get in early in this market. Besides they have got to start from somewhere. We were all young at some stage.

What Car Insurance Rates Are Waiting for Teenagers?

It is no secret that it will never be cheap to insure a teenager whichever way you look at. They may benefit from their parents good driving history if they were added in their policies. This will considerably increase parents’ premiums but it will still be cheaper than getting a policy just for the teenager. Furthermore, the companies that would not want to insure a young driver would accept them to be listed on parents’ policies. Parents may be long standing customer of the company with great records. This may work as a reference for the new driver.

The bottom line is that you are looking to pay thousands of dollars to insure a young person on a separate policy even you were to only buy a third party liability policy. The actual amount would depend on many other factors like zip code, the type of automobile insured and the company you choose to get a quote.

What to Do to Lower Vehicle Insurance Premiums Charged for Youngsters?

If the youngster is in college he/she may need own policy. In these cases, they may find more affordable policies from companies that offer good rates to students living in campuses. They are relatively safer in a campus environment and therefore it is worth mentioning this fact or look for companies offering such discounts. The other young drivers in the college would be able to recommend some good auto insurers.

The other options are to look for possible savings. The first one that comes to mind is to get good grades at school. This would normally qualify you for around ten percent discounts. The second option is to take advance or safe driver courses. This option does help youngsters to learn better driving habits and it may as well save their lives. They can save another ten percent once they complete their courses.

Youngsters should never accept the first quote they receive. As the amount in question is large the possible savings can be huge as well. They can achieve to find cheaper quotes from other insurers by shopping around carefully. The difference between a high quote and a low one can easily be a thousand dollar. This would pay for a lot of things in a young person’s life.

Why Youngsters Are Being Charged High Auto Insurance Premiums

Usually any new driver would be considered high risk due to lack of experience. When you add the lack of life experience, high testosterone and tendency to take unnecessary risks it is not hard to see why companies are worried about insuring them. Generally male drivers between the age of 16 and 19 are considered the highest risk drivers.

The chances of a new driver having an accident in the first year are pretty high. Also, crashes involving young drivers are more serious than others with fatalities and serious damages. Unfortunately many accident statistics work against youngsters in terms of claims and consequent high automobile insurance costs.

What Happens to Car Insurance Rates after Accidents

Automobile insurance companies have certain risk levels and premium charges go with those levels. Depending on your driving history your risk level goes up or down. The more likely to cause accidents the higher risk you are for auto insurers. What better way of proving you are pretty low risk than showing them a clean driving history? It is to say that you are capable of running your vehicle without getting involved in accidents.

What Benefits Drivers Get for Making No Claims?

Motorists start getting discounts for every year they manage to have no incidents or traffic tickets. They can get as much as thirty percent savings after three years of no claims. It is therefore important to keep a clean sheet and keep saving money on premiums. Good driver discounts are the highest discounts most companies offer for a single reason.

After four or five years you can buy accident forgiveness from your current insurer. They sell this coverage usually to their loyal customers with long enough clean driving history. Then, you can keep your rates even though you may be unlucky to have one accident. The insurers take a note of it but already promised not to increase your premium because of it.

How Much Premium Increases You May Suffer After Accidents?

This usually depends on your current savings and seriousness of accidents. If you are found at fault and you caused some damage you expect to see some rises on automobile insurance charges. What this is in fact losing your no claim discounts and getting a little surcharge. So, if you had a few years of no claims bonus you would see considerable rate increases after an at fault accident.

When you apply for your first policy companies have no idea as to how good and sensible driver you are. At that point they will not offer you any discounts for your driving records. But having an accident proves a point in the negative direction. Now you have proven that you can cause accidents and you are higher risk. This may mean you now face surcharges.

A claim would normally be considered important in your records for about three years. Most companies are happy to overlook your driving history more than three years. Therefore, if you just had an accident you will need to wait for three years until your record is considered clean again. However, you would still be seeing discounts on your premiums for every year that you remained accident free following your accident.

Depending on other factors the premium increases could be serious or minor. For example, teen auto insurance premiums would considerably go up following accidents. On the hand, mature drivers with years of experience and otherwise good driving history may not see much change on their rates. Being hundred percent at fault and getting traffic violation tickets and license point deductions will increase the rates more.

Can Car Insurance Companies Cancel Policies Following Accidents?

This is unlikely to happen and they are not allowed to cancel policies midway into the term because of an accident. Policyholders do have accidents and that is why they buy policies to protect themselves. Nonetheless, they are unlikely to have mercy on drunk drivers causing the accidents and they can cancel the policy on that basis.

Car Insurance Discounts for Certain Professions

Historically many large companies of today started their business life as a specialist insurer to certain sector or group. Some of them still work mainly with the same group of clientele. Others build business models on offering good car insurance rates to certain group of people. This does not necessarily mean that they will offer you the lowest rates. Nonetheless, you should at least get a quote from them before checking with the rest of the market.

What Professionals and Groups Can Get Discounts?

Various companies offer different discounts for different groups. GEICO is one of those companies that offer around fifteen percent savings to over 270 professional groups, clubs and associations. USAA Insurance offer policies exclusively for military service personal, their immediate families and retirees. There are other companies that offer discounts for teachers, academic staff, nurses, doctors, engineers, fire fighters and many more.

Not related to your profession you can get discounts for being member of certain automobile clubs like AAA, working for companies with special deals with certain insurers and being member of associations with good ties with insurers. You can check these online and may even become member there and then to qualify for immediate savings.

Why Auto Insurers Offer These Savings?

You may not actually be interested in hearing the answer and the fact that they do may be enough for you. However, there are several reasons. First of all, they study certain professions and find them to be low risk. For example, some companies consider engineers to be low risk maybe perhaps they are more methodological about driving.

Secondly, some companies have chosen certain part of the market as their speciality and they corner that market better than anyone else. For example, USAA Insurance is one of the largest auto insurers in the USA and they achieve it even though they only sell policies to army personnel. They also provide home insurance and banking services for this group. It is clear that it worked out well for them.

Thirdly, it is better to win customer in thousands rather than in ones and twos. By offering discounts to certain groups they manage to lure them in with little advertising efforts. Also, word of mouth works very well when you are targeting certain group that communicate with each other on a regular basis. So, the discounts offered may just be the savings they keep from advertisements.

Would Education and Success in Life Help As Well?

You should absolutely make it clear that you have got a degree and you have a good desk job. Also, being a home owner and living in nice neighborhood qualifies you for lower auto insurance quotes. Some companies care about education, profession, financial standing and background as much as driving history.

This fact has been proven with researches carried out by online brokers. They have chosen several top vehicle insurance companies and got quotes from them using prototype applicants. Results are that applicants with good education, home ownership and married life managed to get better rates than single parents with blue color job and living in a rented apartment.

If you can qualify for any discounts whatsoever why would you not go for it and keep your costs low? Look into what your qualifications are and which companies value those more.

What to Do for Affordable Car Insurance Rates

Some drivers may find themselves stuck with high vehicle insurance premiums. Others may simple want to lower their costs. It is not desirable to be paying over thousand dollars more than your friend with similar details. You need to ask yourself what they are doing to be rewarded by auto insurers. Then, you should look into the areas you can improve. Here are some of the key points to getting the most discounts and lowering your premium.

Driving Related Factors That Affect Auto Insurance Costs

One of the most important and most rewarding factors is driving history. The largest discounts are usually offered to those motorists with no claims and no points on the license. What better way of showing that you are a low risk for automobile insurers than making no claims on your policy. In return you will be rewarded with discounts up to fifty percent.

Good Credit History Is Important These Days

Many people may still struggle to see the relation between credit history and auto insurance. However, most companies are convinced that there is a correlation. Statistical data is strong to show that people with good financial standing are less likely to make a claim. Having above average credit score may mean twenty five percent lower auto insurance premiums.

Buying Safer and Securer Automobiles and Saving on Insurance

Tons of money invested on improving safety and theft prevention solutions on automobiles. These improvements are followed closely by insurers. Companies do reward owners of safe cars since they reduce injuries, property damages and they prevent accidents. Many motorists keep changing their vehicle every three or four years to make sure they have the latest features. Look for the cars that have high insurance ratings and save money.

Your Zip Code and Home Can Reduce Car Insurance Rates

Where you live is very important in terms of premium calculations. Detailed zip code risk assessments tell companies where motorists are more likely to make claims. If you live in a high risk area with congestions, auto theft and vandalism you will pay for it as a way of high premiums. Also, having a garage, off street parking or secure place to park your automobile can save you money. Furthermore, home owners can save money in two ways. Companies offer discounts to people with more settled lifestyle like owning a home or being married. You can increase the savings by insuring your home and car from the same company and get around ten percent savings.

What Else You Could Do to Reduce Vehicle Insurance Premium?

Probably the best place to start is to look at the current coverage. Motorists can find excellent package policies on the market today. The more you customize your policy the more it may cost. Most full coverage policies offer liabilities, collision, comprehensive and uninsured driver coverage. This would be good enough for many people especially when they like to reduce the costs as well as getting a decent policy.

Shopping around is another effective method. The best part of it is that you do not have to wait for years to gain the discounts as it is the case with good driver discounts. You can start searching for a decent coverage at affordable premium right away on your computer.

How Car Insurance Companies Are Regulated?

When choosing a policy people are naturally worried about the security provided behind it. This security comes from financial stability of the firm issuing the policy and industry regulations. Auto insurance companies are regulated heavily for two main reasons. They are financial institutions as well as insurers.

What Sort of Regulations Auto Insurers Must Follow?

For being a financial business, they need to follow regulations similar to banks and investment firms. They need to declare where they invest the funds and there are restrictions as to where they can invest. An insurer must keep funds pretty liquid and stay away from speculations. They cannot collect the premium from you and invest it in the stock market the next day.

Key regulations are imposed because they are an insurance business. First of all, they keep policyholders’ money. Premiums are usually collected in advance before even policy coverage start. This makes the companies owe to customers and this money must be protected. Generally, the premiums must be kept from their running capital. They must be deposited into a different account and their daily business activities carried out from different funds. The same rules apply to brokers and agents. They must account for the moneys until the premiums are paid to the insurers.

Who Regulates Insurers and Insurance Intermediaries?

Every state in the USA has own insurance laws and rules. They have an insurance department to license, regulate and inspect the businesses operating in the state. This department is headed by usually elected insurance commissioner. Insurance companies and intermediaries must have a license to handle selling of policies within state borders.

State insurance department has to make sure that all the laws are followed. They check the capital requirements, solvency, accounting and banking practices of these firms. Insurance commissioner must approve the car insurance rates structure of each firm as well. This does not mean that they set the rates for these companies. They make sure that it is fair and uniform.

Financial Scrutiny and Solvency Tests

As well as the rules of each state companies must follow usual financial scrutiny similar firms are subject to. Their accounts must be audited and certified. They must prove solvency and account for the investments they make. There are limitations as to how the premiums are used and how the company can invest. There is a degree of separation between their financial and insurance activities to protect premiums collected.

How Information Collected by State Insurance Departments Are Shared?

While they are carrying out their usual checks, inspections and dealing with complaints insurance departments collects awful amount of information about each insurer. Many of them publish this valuable insight on their website or policyholder can request them separately. Many states publish policies sold, complaints made and the outcome. They can be a valuable source for a keen policyholder to check and determine which company they like to go with.

Data provided by regulatory bodies and independent firms offer further insight into a company. In addition consumers can check the forums, websites and blogs for customer satisfaction information about companies. They can also compare prices on vehicle insurance comparison websites. Overall, car insurers are not black boxes. They are operating under regular scrutiny from regulators, investors, policyholders and prospective customers.