10 secrets car insurance companies don’t want you to know

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Car insurance covers accidents, damages, injuries and other issues that may occur while driving a car. Pricing can be complicated and one size does not fit all. Rates can vary based on various factors that insurance companies use to calculate your specific coverage. Some additional expenses may be necessary, but here are some tips that might help Save money on your car insurance it’s not that obvious.

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1. Your car’s extras could affect rates

An insurance provider will need to know the make and model of your car, and whether your vehicle has any high-end extras, which could translate to higher insurance costs. They may also consider the car’s security rating, year of manufacture, and likelihood of theft.

Pro tip: There are many factors that affect auto insurance rates, so if you’re considering a new car, check out the finer details about the specifics of the vehicle before you commit.

2. Your place of residence could cost you dearly

The cost of insurance can vary whether you live in the countryside or in the city. High density areas have an increased risk of an accident, so the rate reflects this risk. Another factor that could increase charges is if your hometown has more incidents of car theft. Additionally, in states like Michigan, where there are more cases of insurance fraud and uninsured drivers, insurance costs are higher than the national average.

3. Teenage drivers can raise your fare

Teenage drivers have the highest accident rate of any age group, which is why adding the new family driver to your policy could take a toll on your wallet. Do some additional shopping to see if the cost of having a policy with a teenager might be lower with another provider, or ask your current provider if they offer a discounted rate for multiple drivers. Some insurers reward teens with good grades in school with a discount.

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4. Loans are a factor

Insurance costs determine whether you buy a car outright or get a bank loan for it. A bank may require you to purchase additional collision insurance or additional premiums to ensure their loan is protected in the event of an accident or other damage to your car. Check with your bank before signing a loan for your car to see what type of insurance coverage they may require you to have.

5. Accidents might follow you

Insurance companies have access to two different databases: LexisNexis Comprehensive Loss Underwriting Exchange (CLUE) and Verisk Automated-Property Loss Underwriting System (A-PLUS). Both databases allow them to see if you have filed a claim or been involved in an accident, which they may factor into your insurance costs. These reports can show companies up to seven years worth of claims, so switching providers may not help you dodge a previous problem.

Pro tip: You can request a free copy of your Consumer Disclosure Report from LexisNexis and the Verisk A-PLUS Loss History Report to see what information insurers have access to and if any corrections need to be made.

6. Loyalty doesn’t always equal savings

You might think you’re getting a “loyal driver” discount by staying with the same insurance provider for multiple years, but you might want to do some comparison shopping. While loyalty is important, it also shows providers that you’re comfortable where you are, which they can use to raise your rate.

Try renegotiating if you notice an increase or ask for quotes from other providers to see if switching to something else could save you money.

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7. Monitoring may not save you money

Some insurance companies allow you to add monitoring devices to provide safe driver discounts. These devices, or apps, can track how many miles you’ve traveled, whether you’re braking hard, or when you’re on the road. Details like these are translated into data points for the insurance company to assess. But in some states, insurers can also use this information to raise your rates based on bad driving habits they might uncover.

Pro tip: Know the specific details pertaining to the state where you reside before choosing to go the monitoring device route.

8. They don’t advertise discounts

If you want to lower your insurance costs, it can help to be proactive about the potential discounts you can receive. Call your insurance company to find out if they have any unadvertised offers that you may not be taking advantage of, such as discounts for good students or loyal customers. Also ask about rate reductions for a home and auto insurance package.

9. Insurers know your credit score

Insurance companies may claim that a driver’s credit rating might reflect their ability to pay premiums or even the risk they are insuring. A person with a bad credit score may be considered by an insurance provider to be a higher risk, and this could be factored into the rate calculation.

Pro tip: Find out what constitutes a good credit rating and how you could improve it if you’re worried about how it might affect your insurance rates.

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10. Lower premiums could cost you

Reduced car insurance premiums might sound great if it means you pay less than your current plan, but be sure to compare more than your monthly costs. Lower premiums could mean you have a plan with a high deductible, and you may have to pay more out of pocket for any repairs or damage before your insurance kicks in.

At the end of the line

Knowing how auto insurance works and what factors a provider considers can be a good way for you to cut your costs. Review your car owner profile and think about details that can positively or negatively affect your rates. And compare rates to see if making a switch to another insurance company or adjusting your current policy could help put money back in your wallet.

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This article 10 secrets car insurance companies don’t want you to know originally appeared on FinanceBuzz.


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