Monthly Archives: November 2013

Does the Car Insured Affect Insurance Rates?

Details of automobiles insured are used as key factors in premium calculations. Cars owned utilize people to do more or less with it. If you own an expensive sports car, insurers assume that you will test its abilities more often than not. Therefore they will include higher chance of accidents and possibly higher damages in them due to speed when they are setting up premiums.

Motorists will be able to see the premium differences between cars when they replace the old one with new. To the surprise of many motorists new premiums can really be very high. So, it is a good practice to get quotes before going ahead and paying for your new automobile. In some cases, your current insurer may not be happy to offer you renewal terms especially if you have a teenage driver listed in your policy and you bought a sports car.

What Auto Features Insurance Companies Take into Premium Calculations?

Specifications of vehicles become extra important when you have Collision and Comprehensive coverage. Companies look at the loss history of the type of vehicle; how did they fair in crashes, how often similar cars are stolen and how expensive it is to repair them. Typical features they need to know and affect car insurance rates are;

  • Engine size: affects the speed and the power of the vehicle.
  • Body type: determines the sturdiness in the accidents.
  • Age and value: puts a maximum limit to how much insurers have to pay in case of total loss.
  • Safety and security features: are usual in knowing how well automobiles will protect its passengers and how well it is protected against theft.
  • Crash test ratings: are given after extensive tests as to how well they will stand against certain types of crashes and what injuries drivers and passengers may sustain.

How These Features Are Affected by Other Details in the Quote Form?

Who drives the automobile is highly important consideration. An older, more experienced driver may acceptable with a sports car but it would be too high risk with a teenager. They don’t have enough experience to control themselves. If the car is reaching amazing speeding in seconds they would let it fly instead of gentle stepping on the brake. That is why many teenagers have accidents on the curbs and they are very often deadly because they cannot get speeding and braking right.

Similarly, an expensive automobile can be insured at reasonable premiums if owned by a middle age home owner driver with a garage and living in a nice suburban location. But the costs can soar up if the same driver is living in city center and parking it on the road every night.

So, cars for drivers is a relevant correlation used by insurers. A good driver can get away with owning an expensive or sports car and not get stung by insurance rates. You would understand the concerns of companies when a high risk driver approaches them to insure a high end automobile. They will want to make sure that they do not end up paying thousands of dollars in claims.

Things to Check Before Buying Auto Insurance Policies

You have done your work and find a policy that offers everything you want on the face of it. You should not assume that all the details you want will be there in the contract. It does not take long to have a quick look at it and make sure. Policyholders are responsible for any mistakes or omissions on policies and for the accuracy of the information provided during quote process.

If there is a problem on the wording of insurance contracts insurers will always assume that you knew about them since they have provided everything within the written documents. You read or not is not something companies either concerned or be held responsible. Take your time with understanding the consequences of certain conditions and requirements. Ask questions to your agent, broker or company directly if you need clarification. Here are a few points you should check before paying and completing the purchase.

  • First of all, check that your personal details, insured car specifications (including plate and VIN number) and coverage are accurate. These mistakes can be corrected easily at the time of purchase but can cause real problems at a later stage if they are left to stand as it is. Besides you want to make sure you are paying for the right coverage.
  • Make sure any special conditions, endorsements and additional cover agreed is included in the policy. Extra arrangements over a standard policy are easy to miss. You have spent time and effort to arrange the policy the way you want. Now make sure that it is done and you are not offered a standard policy after all.
  • Think twice if the policy is worded in a way that it will be very hard for you to sue the car insurance company. If the contract requires lengthy process before you can even think of taking a legal action this gives the chance for the company to play hardball with your claims. If you are denied of the right to take legal action, you should look somewhere else. They must be held responsible for their actions and it is your right to demand it.
  • Especially when you are insuring a new and high value automobile you make sure there is nothing in the wordings to suggest that company can use aftermarket parts for auto repairs. Repairs are important part of insurance coverage and you want them done properly. Some companies do guarantee the quality of repairs for the life of the vehicle.
  • Check that right deductibles amounts are listed. Particularly when you increased or decreased the standard policy deductibles you need to double check that this is done. Also, make sure that you do not have a ridiculous glass deductible. Glass claims are very common and deductibles should be very low for them.
  • Exclusions are the area you need to read carefully. Some policies can be cheap but come with several exclusions that you would not have in a standard policy. For example, you may be using your vehicle to commute to work or business place and you may occasionally run errands for your business. In that case you shouldn’t have a condition on the policy stating that the vehicle to be used leisure only.

Factors Affecting Automobile Insurance Premiums

Every auto insurer evaluates every applicant differently in terms of risks the applicant poses. As a result the premiums required will be different for each vehicle owner and this will also change depending on the company. In short, the factors used in premium calculation and their relative importance within will be different for each firm. That is why you can see quotes ranging from very high to moderate and low. Here are some of these factors;

Number of Claims

Number of accidents and insured losses suffered by policyholders are seen as clear proof of what you can expect from insuring such policyholders. The higher the claim count the higher the premiums would be to compensate for high possibility of the insurer having to pay for losses.

Age and Gender of Listed Drivers

Generally, drivers between the ages of 50 – 65 are considered to be safest. Male Drivers between the ages of 16 – 19 are considered to be highest risk. When one group is being very cautious and the other causing reckless accidents it is normal that premiums can be hugely different between these two driver age groups. In addition, female drivers get better rates than their male counterparts.

Features of Insured Vehicles

Cars with high safety features and better crash test results are cheaper to insure. Low value, mid-size, four door sedans are common and they are cheaper to insure as well. Sports cars, SUVs, 4x4s are expensive as they are likely to cause more accidents due to speed and cause larger damages to others due to structure.

Your Zip Code

Where autos are kept overnight and driven mostly is important. Auto theft, accident and vandalism rates in those areas are reflected on the chance of policyholders making a claim and therefore on premiums charged.

Driving History

Apart from having accidents drivers can receive traffic violation tickets as well. These tickets are registered in DMV records and seen by insurers. It is a simple assumption that drivers who break traffic rules are going to end up in an accident sooner or later. That is why they will be facing surcharges on premiums depending on how bad the records are.

Credit Score

Financial histories of policyholders are considered by 90% of car insurance companies when they are determining prices. Few states do not allow use of this information but most do. You can expect as much as twenty percent surcharge should you let your credit score slip lately.

Mileage

It is only natural that drivers who use their cars more will have to pay more premiums. The longer you stay on the road the higher the chance of accidents. And you don’t pay as much if you are driving only few miles a year.

Education and Profession

More and more companies seem to be including education in their premium calculations. In addition a few companies offer discounts for certain professions like army personnel, fire fighters, nurses or government employees. Being member of a trade association like law bar, teachers union or professional associations like engineering can offer you ten to fifteen percent savings. Also, membership to auto clubs like AAA can save you around ten percent.