Reader’s Question:

How do I lower my car insurance rates?

Jim

Wilmington, DE

There are a lot of ways to lower your auto insurance rates. Here are a few simple tips on how you can save on you car insurance rates

1. Shop around. Check car insurance company websites and compare rates and quotes.
2. make sure that the quotes that you’re comparing are for the same coverage.
3. Request for higher deductibles for comprehensive and collision coverage.
4. Ask about discounts that you can take advantage of|
5. Maintain a clean driving record and credit history.

Reader’s Question:

Why do car insurance applications include questions about for credit history or if you have claimed bankruptcy in the past?

Sarah

Birmingham, AL

There is much debate over the use of credit scoring to determine car insurance rates. There have been similar issues in the past with regards of using age, marital status, sex, etc.

Car insurance rates are not solely calculated based on credit score. There are other factors such as the type of car, where you live, driving record, etc. The purpose of getting all of this information is to correlate the insurance rate as closely as possible with the actual cost of potential claims. That is essential to understand.

Using insurance carrier statistics it is known that motorist with bad credit record historically file more accident claims than motorist with good credit. Credit score may also determine whether an applicant is likely to pay premiums in a timely fashion.

Reader’s Question:

If I pay my car insurance every month, does it helps me to build good credit standing?

Gene

Sacramento, CA

Typically car insurance premiums are not paid on a loan contract, but rather directly to the insurance providers. You pay for future coverage and if you don’t pay, then you wont have future coverage, therefore no credit is being given to the consumer. In some circumstances, you may finance your premium through a premium finance contract but those contracts don’t report to a credit bureau and like I said if you don’t pay the collateral (coverage) is removed.

If you have unpaid premiums or outstanding balances for coverage received then a company will try to collect. If they can’t collect they may forward to a collection agency. Those will for sure negatively affect your credit rating.

Not having a credit history can make it hard to get insurance, buy a car or get a house mortgage. A credit score is assigned by many insurance providers and it is based on your credit history including such things as bill paying history, late payments, the number and type of accounts you have, collection actions and outstanding debt. Your payment history typically makes up the most important aspect of this, about 35 percent usually.

How can I EASILY lower my car insurance? It seems that all the auto insurance companies that advertise on TV rarely…if ever tell you how to lower your car insurance rates.

For late model car owners - you might only want to carry collision and comprehensive coverage. What is Collision Coverage you ask? Collision coverage insurance pays to repair your vehicle when and if you are ever involved in an auto accident. It also pays no matter who was at fault.

What is Comprehensive Coverage you ask? Comprehensive insurance pays to repair your car when it’s been damaged by fire, vandalism, theft, or other freak acts of mother nature.

How can you save money on collision and comprehensive coverage? By far the easiest way is to carry the highest deductible that you can afford. The deductible amount is the part of the repair cost that YOU will pay for. Raising your deductible from $250 to $1,000 can save you up to 55% on your insurance premium.

Say your car needs $2500 in body repairs after an auto accident. If you carried a $1000 deductible you will be responsible for $1000 and the insurance company would pay the remainding $1500…..and all other costs that might be un-covered during the repair process.

Doesn’t sound like a good deal to you? The amount of money you will save on your annual insurance premium for having a high deductible will more than off set your $1000 deductible pay out in 2-3 years of time.

Personal injury protection insurance is something you might also want to consider as well. What is Personal injury protection you ask? This pays for medical expenses for you and passengers in your vehicle if you’re ever involved in an car accident. It will also pay medical expenses for you and your immediate family if you are ever injured in someone else’s vehicle or when you’re walking or riding a bicycle….don’t laught this happens quite often.