Why Should You Compare Car Insurance Rates?

key-791390_640Sure, it’s kind of a hassle to call around for car insurance rates. Consumers have a lot going on with their lives, and paying the same six-month premium with a credit card twice a year isn’t much of an inconvenience. But thanks to the Internet, consumers don’t have to call a bunch of insurance agents and rattle off their stats hoping for a sliver of savings while still being safe in their cars.

Substantial Savings

On insurance comparison websites, consumers enter their information into a simple form. Then the website shows the relevant rates of available insurance companies. The better comparison websites offer phone support for consumers who have questions or run into problems.

With the comparison websites, visitors can save hundreds of dollars on their premiums with little effort. The website CoverHound allows you to compare car insurance through an easy user-interface. Depending on the state, drivers may be eligible to get more discounts, so definitely take advantage of their phone support and speak to an advisor if you have the time.

Things change

Nowadays, people often switch jobs or transfer to different office locations. Of course, changing states requires a new driver’s license and plate, so a consumer’s current insurance company might change rates. But even if a driver just moves to a different part of the same state, insurance rates can change drastically.

Life is not perfect. Accidents and tickets happen. If your current auto insurance rates go up because of a move, a divorce, a ticket or an accident, looking for a better deal is a good idea. If the current insurer has the best deal, and its level of service is acceptable, then just compare rates again in six months.

Not all insurers treat traffic tickets the same, says Susan Johnston Taylor of U.S. News. Some companies raise rates for three years, while others may drop the surcharge after a year. Not all states use the same point system either, and some offer a traffic school option to avoid points.

More discounts

While looking for better rates, it’s a good time to check on discounts. In New York, drivers get an automatic 10 percent car insurance discount for three years if they complete a defensive driving course online. The course can cost less than $25.

Occupation and type of college degree can result in premium discounts, according to a piece in USAToday. The important thing is to ask about the discounts the consumer’s current insurer offers and to ask the agent of a potential new policy. Consumers may have more luck obtaining discounts when shopping for a new policy because companies often take current policyholders for granted.

Drivers can get additional discounts from some companies by volunteering to use data tracking devices that helps insurers establish driver safety ratings based on driving habits. In a recent article appearing in Fortune, it was revealed that Allstate Insurance Co. is moving toward such a device. Keep in mind, however, that depending on where a driver lives, a tracking device may not produce any discounts and not because of bad driving habits. Urban roadways have more traffic and stoplights than rural areas. Usually after a month, the driver can tell whether the tracking device will do any good.

Meanwhile, fudging mileage when reporting it to an insurer may not be much of an option as companies adopt technology that tracks vehicle location based on license plate scans, according to a recent story in the Insurance Journal. One of these technologies is the recently announced GarageConfirm, a service developed by Verisk Analytics that allows insurers to verify driver information before renewal or sale.

Claims and credit

Filing a claim can increase premiums depending on the insurer and the state in which the insured lives, according to a recent article by Ellen Chang of Main St. The moral of the story is to consider paying out of pocket for minor repairs that are higher than the deductible because that may be less expensive than an increase in premiums.

Some insurers factor in credit rating when determining premiums. Of course, keeping credit card balances low decreases interest payments, but a positive jump in credit score also may lead to lower premiums.

Credit bureaus are secretive about how they determine FICO scores, and insurers use a variety of credit score indicators to rate drivers. According to Consumer Reports, the state the driver lives in affects how credit score factors into premiums. Consumer Reports offers a few ideas to avoid being penalized for credit below:

  • Avoid department store cards
  • Don’t add new cards
  • Monitor credit reports
  • Keep balances low

It’s not that insurers are necessarily evil. It’s just that statistically, the more fiscally responsible a driver is, the better his or her driving record will be.

Spending 20 minutes every six months to investigate less expensive auto insurance policies online can save consumers a lot of money in the long run. If enough consumers do it, insurers may wake up and try harder to keep current policyholders.

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1 Comment

  • Great post. A small addition to the life changing part of the post. If you’ve changed jobs you might also be driving less, which would allow you to take advantage of low-mileage discounts that some car insurance companies offer savings to drivers who put fewer than a predetermined number of miles on their vehicles each year.

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