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How To Get An Auto Insurance Quote

Written by W. Lane Startin. Posted in Research Last Updated: 11/15/2010

How to avoid inaccurate quotes by providing specific information, verifying your driving record, and running your credit check sooner than later.

He didn't get the best quote.

When quoting auto insurance, there's no such thing as TMI.

Have you ever been given a quote for auto insurance only to find that when the policy is written the premium is nowhere close to what you were told?

This happens to a lot of people, and often times it’s because the insurance company found information which wasn’t provided but ultimately had a profound impact on the price. Doing your homework before shopping for insurance quotes can save you money – and a big headache – later on.

Basic Information for an Insurance Quote

Getting the best auto insurance quote relies entirely on the information provided. While it should be obvious to provide basic information on drivers and vehicles, some other bits of information may not be. For example, knowing how many miles you drive to work one-way or what ZIP code your car is parked in can make a difference as well.

While year, make and model of your vehicle is sufficient to run a quote, providing the full VIN during the can uncover some sometimes surprising differences. In addition to identifying your specific vehicle, a VIN also provides detailed information regarding your vehicle’s specifications. While not terribly common, there can be significant differences in insurance ratings between nearly-identical vehicles. If that’s the case with you, a quote using a VIN will identify the issue right away.

Also make sure you’re quoting the same liability and full coverage levels from company to company. Insurance agents call it “comparing apples to apples,” and it’s important.

Check your Driving Record Before Quoting

When looking for the best quote it’s better to have too much information than not enough when it comes to tickets, accidents and claims. List all accidents, tickets and claims you’ve incurred in the last five years, no matter how trivial you think they may be. While some companies will look at the full five-year history, others may only be interested in the last three years. Also, not all companies look at the same things. This can potentially result in a substantial difference in quoted premiums.

Many states provide online driving histories on their DMV web sites for a small fee. If you need to refresh your memory on things that happened several years ago, this can be a good resource.

But you don’t have to do that.

Instead, have an insurance agent run a full driving history profile on you. These histories not only include tickets, but also include claim information that won’t be found in state DMV databases. These are also the reports that insurance companies use when rating their auto insurance policies. Knowing what’s on the source documents definitely helps.

These driving history reports can and do have occasional errors. Don’t be afraid to ask your agent for a copy of this report and point out any problems. A good agent will work with you to ensure any negative, erroneous information is disregarded by underwriting.

Give Yourself Some Credit

Many insurance companies offer discounts based on credit. While bad credit usually just means there’s no discount, people with particularly good credit can get very substantial discounts of up to 40 percent with many companies. Typically the information needed for a credit score is a full Social Security number and current address.

Keep in mind, credit checks made by insurance companies are not the same as a full credit check made by a bank. Insurance agents don’t have access to or use your standard FICO credit score. Instead the credit score they use for quoting and rating purposes is typically determined by proprietary means. In other words, there’s really no way to determine your credit score from an insurance quote. What information the agent can provide you generally has no relevance outside the insurance company.

While the credit check is not actually necessary until the policy is written and goes to underwriting, getting it done at the quote stage gives you the most accurate quoted premium. In terms of knowing exactly what you’ll pay, running the check sooner than later is far superior to simply saying your credit is “good.”

Cheap Car Insurance For Women

Written by W. Lane Startin. Posted in Research Last Updated: 11/08/2010

Why there isn’t a “woman’s discount,” how women can save money on car insurance, and how to best utilize discounts.

Cheap car insurance for women

Women have the advantage!

While many things in today’s marketplace are geared towards women, the fact is car insurance really isn’t.

While rates among the sexes may not be entirely equal, the auto insurance shopping process by and large is.

One might be tempted to look for auto insurance discounts specifically tailored towards women.

However save yourself the energy: they don’t exist.

An Even Playing Field for Women… sort of

Insurers have to be very careful to tailor their rates and discounts based on tangible statistical data. Giving special discounts to women or making cheap car insurance for women (or to men, for that matter) without any other statistical qualifiers is considered discrimination, and that’s illegal.

That said auto insurance rates for women do tend to be slightly lower than they are for men, all other things equal. This is just as true at age 18 as it is at age 65. The reason for this goes back to statistics. Across the board women are involved in slightly fewer accident and claim situations than men are. Therefore, they pay less in premium. Rest assured the old sexist stereotype of a “woman driver” simply doesn’t wash in the insurance world. If anything, the opposite is true.

Women: Do Your Research

The best way to get cheap car insurance for women is to shop around. Rates from company to company can and do vary a lot, so a little research can do a whole lot of good. When shopping for car insurance, be sure to provide the full VIN for all vehicles, how many miles you drive to work, who drives your vehicle and how many accidents or claims you’ve had in the past five years.

Don’t lie on the latter point, underwriters will find out if you do.

Make sure you quote the same deductibles and liability limits when you shop for auto insurance. A good benchmark to use is a 50/100/50 split limit or $100,000 combined single limit (CSL) for liability, and a $500 collision and $100 comprehensive deductible for full coverage.

Sensible automobiles are cheaper to insure than exotic sports cars. While it may bruise your ego a bit to drive a minivan, at least you can take solace in the fact it’s nowhere near as expensive to insure as a sports car.

Remember different insurance companies look at different things when considering quotes. Too much information is better than not enough.

Ladies Should Look for Discounts

Auto insurance discounts are commonly available for women who bundle insurance coverages with the same company. Insurance carriers routinely offer auto insurance discounts to individuals who buy homeowners or renter’s coverage from them.

Some companies also offer auto insurance discounts with a life insurance purchase. By the way, all things equal women get better life insurance rates than men because – statistically speaking – they tend to live longer.

Many insurance companies offer discounts designed to attract business from young families. For example, some companies offer a “new parent” discount for women (and men) who have small children, typically preschool age or younger. Older drivers can take advantage of discounts by taking defensive driver courses.

Budget Car Insurance

Written by Todd Clay. Posted in Research Last Updated: 09/29/2010

How to get cheaper auto insurance, when you should lower your liability limits, raise deductibles, or drop full coverage altogether

Man doing the bills

When to consider cutting auto insurance out of the budget.

No one wants to pay too much for car insurance. After all, if one can save some money by eliminating unnecessary expenses, why not consider your insurance bill?

It’s not always a good idea to skimp on car insurance. Being cheap is great – being dumb is not. The ideal is to purchase coverage that will be there for you in a worst-case scenario in the most cost-effective manner possible.

In order to properly budget car insurance, the trick is to know how car insurance works. The main ways people save on their premiums are to either lower their liability limits or raise their collision and comprehensive deductibles.

Other types of coverage, such as uninsured and underinsured coverage (UM/UIM), and medical payments in states that don’t have “no-fault” laws, represent a small percentage of the auto insurance premium and therefore don’t generate significant savings when changed. These are best left alone.

Lowering Liability Limits If It Makes Sense

Liability limits are often expressed in a group of three numbers, such as 25/50/15. This example represents limits of $25,000 in injury coverage to one person in an accident, $50,000 in injury coverage to any number of persons involved in a single accident, and $15,000 in property damage. This 25/50/15 level is the state liability minimum in Idaho and several other states. Some states have even lower minimum liability requirements.

In other words, keeping your insurance at state liability limits is often insufficient for anything other than minor accidents. If you’re found at fault totaling a new Mercedes and injuring three people, the state minimums will be exceeded very quickly. You will probably be personally liable for the difference. Accordingly many insurance agents recommend carrying liability limits of no less than 50/100/50 – often more in metro areas.

Raising Deductibles if You Can

If you’re still making car payments, your bank will require you to carry full coverage. If you don’t, your lienholder has the right to “force place” insurance on your car and bill you for it. Force placed insurance is almost always very expensive. Keeping your own full coverage is a much cheaper alternative.

Fortunately most lienholders only require deductibles of $1,000. In addition, most personal auto insurers offer $1,000 as their highest deductible. This gives you some leeway in maximizing your insurance value.

When considering your deductible, ask yourself how much you are willing to personally pay to get your car fixed and then set your deductible accordingly. Deductibles are typically available in $0, $250, $500 and $1,000 levels, although your company may offer something different.

To minimize your insurance cost don’t set your deductible any lower than what you’re comfortable with, and to give you peace of mind don’t go any higher. Also remember collision and comprehensive deductibles are different and separate. Many insurance companies cover glass repair (but not replacement) at a $0 deductible for a small cost or even no additional cost at all. Many people keep their comprehensive deductible lower than their collision deductible.

Consider Dropping Comprehensive and Collision?

No state requires collision or comprehensive coverage. Once the car is paid off, you can consider dropping full-coverage entirely. However, if you do this know there’s no coverage if your car is stolen or vandalized, and no coverage to fix your car unless someone else hits you and is found at fault.

In this situation ask yourself if you would be OK walking away from the vehicle if something major happened to it. If you can afford it, then dropping full coverage may be a good idea. Alternatively, it is often possible to drop collision coverage but keep comprehensive, or vice versa. Talk to your agent for more information on that.

Affordable Auto Insurance For The Cheap At Heart

Written by Todd Clay. Posted in Research Last Updated: 09/22/2010

How to get more affordable car insurance, liability considerations, and when to drop full coverage

man's hand with piggy bank

Make sure you're saving on car insurance in the right places.

Affordable auto insurance is a balancing act. Sure, you want to pay as little in premium as possible. However, you also want to make sure you’re covered correctly.

People who are in an accident with inadequate insurance often find themselves in a position which is not that much better than having no insurance.

If you stay with the same company, there are effectively two ways to tweak your policy to get the most affordable auto insurance. For one, lower your liability limits. Second, adjust “full-coverage” or material coverage by raising deductibles or by eliminating material damage coverage entirely.

Other components of auto insurance, such as uninsured and underinsured motorist coverage and medical payments in states that do not have “no-fault” insurance, generally represent a small portion of the total premium. That’s why they usually provide little cost savings if changed.

Liability Changes for Savings

The most basic component present in all auto insurance policies is the liability portion. This is required in most US states. Liability is further divided into three parts, liability for injury/death to one person, liability to injury or death to more than one person, and liability for property damage. Liability coverage is defined by the maximum amount an insurance company will pay in any given claim for each category.

In insurance parlance, liability coverage levels are often defined by a grouping of three numbers: 50/100/50 – that stands for $50,000 for injury or death to one person, $100,000 for injury of death to more than one person, and $50,000 for property damage. In some states, companies also offer a combined single limit liability policy, or CSL. This is liability that covers all three liability scenarios under a single limit, and can therefore be more flexible.

While it’s tempting to get just enough liability insurance to meet the state minimum, that’s generally not a good idea. State mandated liability insurance requirements are often outdated and therefore inadequate for anything except minor accidents.

For example, Idaho requires minimum liability coverage of 25/50/15, a fairly typical amount across the country. Some states require more, others require less.

That’s all fine and good until you’re found at fault totaling a $45,000 Mercedes. That $15,000 property damage limit isn’t going to cut it, and you face the possibility of being sued for the difference. Accordingly many insurance agents recommend liability limits no lower than 50/100/50, or $100,000 CSL if available.

Full-Coverage Changes To Save

The other main component of auto insurance is known as material damage or “full coverage.” This pays for repairs to your own car if you’re found at fault, or if you’re involved in a single car accident. If you’re making car payments, your bank or lienholder will require you to keep this coverage.

Here’s an industry secret: most lienholders don’t care what deductibles you carry, and there’s where your wiggle room is.

Material damage coverage consists of two deductibles, a collision deductible which applies to accidents, and a comprehensive deductible which covers non-accident related mishaps such as theft, vandalism damage caused by hitting animals.

These deductibles are generally available in amounts from zero to $1,000. The comprehensive deductible is usually (but not necessarily) lower than the collision deductible. When determining your deductibles to get the most affordable auto insurance, go with the highest number you’re comfortable with.

Once the car is paid off, no state requires material damage coverage. That means that you can legally drop full coverage. While this single act can make give you more affordable auto insurance, it shouldn’t be taken lightly. Ask yourself this question, “If this car is stolen or seriously damaged in an accident, will I be OK walking away from it?” If your honest answer is yes, then drop material damage.

What Happens if I Cancel My Car Insurance?

Written by Todd Clay. Posted in Research Last Updated: 09/18/2010

Your right to cancel auto insurance, how to handle switching companies, and canceling when you no longer need coverage.

chinese businessman tearing up contract

Do you just tear up the policy when you don't want it anymore?

What happens when you cancel your car insurance?

It’s easy to cancel coverage. You can simply stop paying, but the cancellation is not instantaneous. When canceling insurance, it’s important to inform your insurance company of the exact date you want to cancel. Otherwise you may wind up paying for insurance you’re not using.

Your Right to Cancel Auto Insurance

Although some agents may try to imply otherwise, the fact is you have the right to cancel your auto insurance at any time for any reason…or for no reason at all. While changing companies at renewal can be an easier process for both you and the company, you do not have to wait until renewal to do so.

That said, there are a few things to consider if you rewrite your coverage.

First, your new insurance company will likely require a down payment to start your new policy. While there can be savings in the long-run changing companies, the upfront costs may result in a higher cost in the short-run. Be prepared for some additional charges when changing companies.

How to Handle Switching Companies

Secondly, ask your new insurance company to send a cancellation to your old company on your behalf. This prevents you from having to make that awkward call to the old company. A cancellation can be done with a simple note faxed to the old company from the new.

It can also be done with an “Acord Cancel” form. This is a standard industry form that most companies and agents are familiar with. Your new company will be happy to oblige, and your old company is required to honor the request. Agents much prefer sending cancellations than receiving them.

Getting a Refund

Also remember the chances of getting a refund back from your old company are pretty good. Most insurance companies design their payments so that you’re consistently paying for coverage not just for today but for a certain period into the future, generally around four to six weeks.

This is intended to keep your coverage from lapsing in the event of an inadvertent short or late payment. Further, insurance companies are required to refund any premium applied for unused time directly to you – called a “return of unearned premium.” As a result you may get a check back from them (or at least a smaller bill) a few weeks after you cancel.

When You Just Cancel Your Policy

For the very same reason, it is important to inform your insurance company if you’re canceling coverage due to selling a vehicle or otherwise not driving it anymore. Remember, it’s not illegal to own a car without insurance. Rather, it’s illegal to drive a car without insurance.

If you simply stop paying for insurance the coverage will eventually be canceled, but not until four to six weeks after the fact. Informing your insurance company of the exact date you’re not using a car anymore prevents you from paying for a month or more of needless coverage.

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