Understanding the basics of car insurance can be difficult enough. Below, we have outlined some important, yet oftentimes obscure insurance facts.
Fact #1: Your credit will impacts your insurance rates
Believe it or not, your credit may impact your insurance rates. Insurance providers have found that certain credit characteristics for an individual are useful to predict of how likely it is that the individual will have an insurance claim. Insurance companies may use some variables to assess the likelihood of claims submitted. These variables may include age, driving record, claims history, place of residence, the type of car and the average miles driven.
Fact #2: Brand loyalty can cost you.
If your mindset about automobile insurance is "set it and forget it," you might want to reconsider. Years ago, insurance companies evaluated a short list of factors when calculating your premiums.
Instead of allowing your policy to automatically renew, comparison shop once a year to ensure you are getting the best auto insurance rates. Some companies provide policies direct to consumers, while others sell policies through agents or brokers. An easy place to start is by getting auto insurance quotes online, which could save you money.
If you are worried that lower rates mean less coverage or poor service, do not be. Today, there are plenty of insurance companies that offer affordable premiums, well-rounded coverage and excellent customer service.
Fact #3: If you stop your payments you will pay in the long run.
If you think switching car insurance companies is as easy as stopping payment, think again. Sure, your policy will cancel, but your existing insurance company could report you to the credit bureaus for non-payment, damaging your credit score in the process.
Your insurance history will reflect a cancellation which may cause a new provider to decline your application or charge you higher premiums in the future. Instead, be sure to complete the necessary paperwork with your existing provider, such as a policy cancellation form, and time it right by starting your new policy on the date your old policy ends.
Fact #4: Your car insurance company can cancel or non-renew at any time.Your insurance company can cancel your policy at any time if you violate one or more of its guidelines during your policy period. Same goes for non-renewal. Things such as failing to pay your premium on time, losing your driver's license due to suspension, submitting too many at-fault claims, or misrepresenting your driving history or past insurance claims could all be reasons for cancellation or non-renewal.
Fact #5: You could save money by paying your car insurance premium in full.
You might be surprised to learn most car insurance companies charge an administrative fee to break up your premium payments into installments, such as paying every six months, every three months or every month. The more you delay your payments in installments, the more these "convenience fees" add up, and your once-cheap car insurance can now cost substantially more.
Be sure to ask your provider what its administrative fees are. If it makes financial sense and you can swing it, pay your premium up front and in full. Not only will you avoid the added expense, you will not have to worry about missing a payment, or being late on payments, both of which could be grounds for cancellation. Other factors, such as the type of car you drive, can cost or save you money on car insurance as well.