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Will Your Insurance Go Up After An Accident?

Written by Todd Clay. Posted in Research Last Updated: 07/25/2009

What happens to your insurance rates when you have a wreck

Will you pay more for your insurance if you have an accident?

Will you pay more for your insurance if you have an accident?

So you’ve had an accident – and you want to know if you’re going to pay more for your car insurance. Your auto insurance premiums could go up. But then again, you could pay the same. It depends on a number of factors. I’ve collected some helpful principles on whether auto premiums will increase after you have an accident.

Your Insurance Company

Your insurer plays the biggest role in determining whether your rates will increase. After all, your insurance company takes on your risk every month. If their actuaries say it’s now more expensive to insure you, you’re stuck with it. Not every actuary is the same. Where one company will tack on a 10% premium surcharge in a given accident, another company won’t do anything. That’s why I’ve included other factors that influence their decision.

Were You At Fault?

A big factor determining whether your auto premiums go up after an accident is if you were at fault. If you caused the accident and the damages were over a certain threshold (often $500 after deductible) a surcharge is likely. How much of a surcharge depends on the severity of the damage and your insurer. When I was an agent, surcharges came in 10% increments. Those surcharges lasted 3 years in most cases.

Another consideration: “At-Fault” is sometimes determined by percentage of fault. If you are 25% at fault in an accident, a surcharge is less likely compared to a person who was 75% at fault. Your state mandates whether at-fault percentages are a factor for surcharges.

It is possible for your insurance company to raise your rates even if you were not at fault. If that happens, the insurer weighs a number of factors, ex. number of claims, frequency of claims, severity of claims, longevity of customer. In other words, just because you weren’t at fault doesn’t mean your rates will stay the same.

Discounts & “Accident Forgiveness”

If you’re a good driver, you may be enjoying a good driver discount. However, an at-fault accident will probably eliminate your discount. Even if you don’t get a surcharge, you’ll pay extra premium if you lose your discount.

Some companies also offer “Accident Forgiveness.” This feature allows policyholders a “free” accident where the company will not surcharge you for an at-fault accident. Keep in mind – you pay for that option. Although it’s not the same price, it’s like prepaying on a premium surcharge. There may be additional limitations to that option, so read your policy.

What Can I Do If I Get Surcharged?

If you feel you’re getting an unjust premium surcharge, you can appeal to your state’s department of insurance. That action may reflect negatively if your policy comes up for renewal and you don’t want to be cancelled. Only take that step if you are confident in your innocence.

Also, you can always shop for a new policy. You could still save money even with an at-fault accident. Always disclose any incident if you talk to other insurers. It takes awhile for the an accident to show in their reports. They could cancel you if you fail to mention the incident when they discover it.

Get Cheaper Car Insurance By Improving Your Credit Score

Written by Todd Clay. Posted in Research Last Updated: 05/18/2009

Three Steps to Improve Your Credit And Pay Less for Auto Insurance

How your credit will affect your car insurance rates.

How your credit will affect your car insurance rates.

All of us want to pay less for car insurance.  Sometimes it feels like we are pouring hundreds of dollars down the drain, especially when we go for years without making a claim.  So it makes sense to do everything you can to cut car insurance costs.

But there may be one thing you haven’t considered.

Many consumers cut costs by raising deductibles on comprehensive and collision coverage. Some may even eliminate collision coverage for an older car altogether.

Improve Your Credit For Cheaper Rates

Yet a less obvious way to get cheaper car insurance is to improve your credit score. Yes, that annoying number you see when you check your credit haunts you enough. But the reality is that it usually impacts your car insurance costs, too!

Your credit report reflects who you are.

In addition to showing your credit and payment habits, it has transformed into much more.  Your credit report now shows additional items, like where you work, how much you earn, how long you have worked in your present job, tax liens or judgments against you, and other things – information not seemingly related to your bill payment history.

Insurance Companies Use Credit To Determine Rates

As a result, many car insurance companies have jumped on this information.

Car insurance companies now have statistical evidence proving that people with lower credit scores make more claims. Insurers have convinced themselves that this statistic-while not true for every single driver-applies to a lot of people. In industry lingo, it’s called actuarial data.

But what does this mean to you?  Simple: If you have a low credit score, a car insurance company will infer a higher likelihood of making claims and, thus, charge you a higher premium.

Three Steps To Improve Your Credit

The best thing you can do is improve your credit score.  You should already be monitoring your credit and behave in such a way to maximize that number. But this insurance revelation should provide even more motivation for having a good credit score.

Here’s three steps to take to improve your credit and lower your auto insurance:

1) Get a copy of your credit report every year. Examine it carefully to make sure all the information is true and accurate.

2) Don’t assume that, even if you haven’t missed any credit card payments, your credit report will be fine. Many credit reports contain errors – some even report incidents for other people entirely. That’s why it’s important to check yours periodically.

3) Act in a way to keep your credit clean.

By taking these steps to improve your credit score, you’ll improve your chances of getting better financing on your house or car. In time, you should also pay less for your car insurance.

Most Stolen Cars

Written by Todd Clay. Posted in Related Stuff Last Updated: 05/09/2009

Do You Own One of the Top 10 Most Stolen Vehicles in the Country?

Did this thief find one of the most stolen cars?

Did this thief find one of the most stolen cars?

Is your car one of the most stolen cars in America?

Every year, over 1.3 million cars are reported stolen. According the National Insurance Crime Bureau (NCIB), many of the same cars rise to the top in their annual list. Surprisingly, the most stolen cars are usually the most common on the road. Every 24 seconds another car is stolen – will yours be next?

Thieves Prefer Common, Japanese Cars

You may be shocked to discover Porches and BMWs don’t top the list. No Lexus is in the top ten. Evidently, thieves aren’t looking for cars with the most prestige. Most likely they want the more available cars. Simply put, there are more Honda Civics on the road than Lotus Elises.

Moreover, thieves don’t prefer American-made vehicles. In fact, the three most stolen vehicles in the United States aren’t made by US companies. Reviewing the Top 10 most stolen cars, this particular crime of opportunity lends itself more to Japanese-made automobiles than those made in Detroit.

Coverage for Stolen Cars

In case you’re wondering, comprehensive insurance usually covers a stolen car. If it ever happens to you, contact your insurance company. Your adjuster should be able to take care of the loss, minus your deductible in a timely fashion. If not, you can always leave a review for how they treated you: Customer Reviews

Check out the list. If your car is listed below, you might want take extra precautions to keep it safe. Otherwise, you could be looking for a new ride sooner than you’d like.

Rank

Most Stolen Cars In 2007

1

Honda Civic (2005)

2

Honda Accord (1991)

3

Toyota Camry (1989)

4

Ford F-150 (1997)

5

Chevrolet C/K 1500 (1994)

6

Acura Integra (1994)

7

Dodge Ram Pickup (2004)

8

Nissan Sentra (1994)

9

Toyota Pickup (1988)

10

Toyota Corolla (2007)

*The NCIB publishes the most stolen cars list. According to their website, the NICB “is the nation’s leading non-profit organization dedicated exclusively to preventing, detecting and defeating insurance fraud and vehicle theft through information analysis, investigations, training and public awareness.”

When To Drop “Full Coverage” Insurance

Written by Todd Clay. Posted in Research Last Updated: 08/17/2012

Four Questions To Ask Before Dropping Comprehensive And Collision On Your Vehicle

When You Should Drop "Full Coverage" On The Old Beater

When To Drop “Full Coverage” On The Old Beater

Knowing when to drop full coverage auto insurance can be tricky. As your car ages, keeping comprehensive and collision coverage may not make sense. At some point, you could be paying more for insurance than what your car’s worth. Since you’re aiming to save money, it’s worth exploring when to drop full coverage. You may be wasting money by keeping it.

“Full Coverage” Is Physical Damage Coverage

Before knowing whether to stop carrying it, it’s good to understand what “full coverage” is. Full-coverage insurance is another way of saying comprehensive and collision – with liability coverage. Comprehensive coverage (comp) covers the physical damage of your car when not involved in a collision. Shattered windshields, vandalism, even hitting an animal could all be damage covered by comprehensive insurance.

Collision coverage is different. If you are involved in an at-fault accident, your vehicle could be damaged. Collision covers the physical damage to your own car if you hit another car, a telephone pole, or another object and the accident is your fault. Both collision and comprehensive make up “full coverage”. Check out our article on Full Coverage Auto Insurance for more information.

There are several considerations to make before dropping full coverage. Make sure you review these questions before contacting your agent.

Question #1: What Do You Owe On The Car?

If you owe money on your car, then your finance company will probably require you to keep comp and collision. If you lease your car it’s usually the same deal. Before you drop full coverage when you owe or lease, talk to your bank first. Otherwise, keep both coverages until you fulfill your financial obligation.

Question #2: What’s Your Replacement Cost?

Comprehensive and collision covers the physical damage to your vehicle. If your vehicle is not worth much, it may be time to consider dropping full coverage. For instance, if it costs $400 a year for comp and collision and your vehicle is only worth $1600, think about dropping it. In four years time ($400 x 4 = $1600) you could have paid for the vehicle with the comp and collision premium – assuming you did not make a claim. Still, consider your driving history and cash in the bank before you call your agent.

Question #3: Should You Drop Collision or Raise Deductibles?

Collision is more expensive than comprehensive. On my policy for this period, I’m paying $23.70 for comp, but I’m paying $53.60 for collision. Granted, I carry a $250 deductible on comp and a $1000 deductible on collision, but that’s still a significant difference. If you’re a safe driver, you may consider dropping collision on an older vehicle.

Instead of dropping full coverage, you could also raise your deductibles. By carrying a higher deductible, you carry more of the risk associated with driving. That’s why it’s cheaper to have a $1000 deductible versus $250. If you want to save money, but don’t feel safe dropping comp and collision completely, just raise your deductibles.

Question #4: What About Full-Coverage Peace of Mind?

You may be looking to save money. But if you get nervous driving down the highway without comp and collision, it’s probably not a good idea to cancel the coverage. An anxious driver is a bad driver. Even if you’re not normally edgy, dropping certain coverages can be unnerving. Before dropping full coverage, just make sure you’re comfortable with the new arrangements. You will save money – but you may lose sleep. Weigh your options and make an informed decision.

One final thought: you could also just cancel collision. Since comprehensive is fairly inexpensive, you might want to leave it on your policy – even if it’s an older vehicle. Comprehensive covers your car it’s stolen, a tree falls on it, and more. You may not have coverage for physical damage in an at-fault accident, but it would cover other unforeseen incidents.

Consumer Reviews: Car Insurance Companies

Written by Todd Clay. Posted in Related Stuff Last Updated: 04/18/2009

See what actual customers have said about their auto insurance company – the good, the bad, and the not-so-pretty

She likes her insurance company.

She likes her insurance company.

We’ve collected one hundred plus consumer reviews for auto insurance companies. Each review comes from actual customers, collected over many months, and time-stamped. Reviewers post actual experiences they’ve had with insurance companies. Sometimes they’re current customers – often they’re former customers with bad experiences.

Consumer Reviews for Car Insurance Companies

Consumer Reviews for the Big and Small Insurers

Consumers review the big names. Sometimes you’ll hear about large insurers not keeping their promises. Problems from Katrina and other natural disasters often suggest those guys are just out for themselves. But read how they treat regular customers – from the customers’ own words.  

Not only that, but we also provide consumer reviews for many smaller insurers. If you’re shopping for car insurance, you need to see what other customers have said – before you buy. This is especially true for smaller carriers.

Leave A Review About Your Own Experience

One more thing: you can help other consumers as they shop for insurance. If you have an experience with a particular company, feel free to leave a review – even if it’s a negative experience.

I’ve included links below for all the insurance companies we have reviews for. If you don’t see the company you want to review – no problem. Send me a message. Write up a short review and give them a 5-star rating for Overall Rating, Price, Service, and Claims. I’ll post it as soon as possible.

As always, everything on Car Insurance Guidebook is FREE.

AAA Customer Reviews

AIG Customer Reviews

Allstate Customer Reviews

American Family Customer Reviews

Arbella Customer Reviews

Commerce Insurance Customer Reviews

Eastwood Customer Reviews

Empower Insurance Customer Review

Erie Customer Reviews

Esurance Customer Reviews

Farm Bureau Customer Reviews

Farmers Customer Reviews

GEICO Customer Reviews

Guide One Customer Reviews

Liberty Mutual Customer Reviews

Nationwide Customer Reviews

Plymouth Rock Customer Reviews

Progressive Customer Reviews

Shelter Customer Reviews

State Farm Customer Reviews

Sun Coast General Customer Reviews

Teachers Customer Reviews

The Hartford Customer Reviews

Travelers Customer Reviews

USAA Customer Reviews

Wawanesa Customer Reviews

 

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Car Insurance Guidebook Unravels the Car Insurance Mystery

Unless you work in the car insurance industry, the topic is probably a mystery to you. The words deductible, comprehensive, collision, liability, premium, loss of use and bodily injury are all gibberish when they reach your ears.

Unfortunately, insurance is something that you are required to have by law if you want to drive. Because of how confusing it is many people go around in almost an insurance daze while they get car insurance quotes from the auto insurance companies that they have heard of. In reality, they are completely lost as to what they are actually buying.

Instead of looking at what each insurance company offers in the terms of protection for both themselves and their car, they are instead looking for cheap car insurance. Finding the cheapest car insurance coverage makes having to buy the required product all that much less painful, but misses the whole point of having insurance.

Learning about insurance through your insurance agent or websites like Car Insurance Guidebook will give you the upper hand when you looking for car insurance. You can take your knowledge and not only find the best price for insurance, you can use it to find really great insurance to protect you and your assets. Then you aren’t stuck settling for just average car insurance that can hurt you financially if you ever need it because there isn’t enough protection.

For example, when looking for insurance the car insurance rates are just the first of many factors that need to be taken into account when you are shopping around for car insurance. You also need to take into account the type of vehicle that you are driving. Many people don’t know this.

Are you driving around a vehicle that is a new sedan and can be protected under any blanket insurance policy? Or do you have an old car that you fixed up that needs special protection and could be better covered under classic car insurance?

Don’t just assume that when you compare car insurance that it will be a one-size-fits-all policy. This is where the insurance knowledge will come in handy; you will know what you need to protect yourself and your vehicle.

You will understand what your insurance agent is talking about when they use insurance terms and you will actually be able to make an informed decision. This is much better for you instead of the “nod and smile” approach people take in their insurance agent’s office.

Also just like your life changes your insurance needs will change. This year you may just need to learn about the best deductible to have. Next year you may need to educate yourself on car insurance for young drivers. As the years pass, motorcycle insurance may be something you will need to know.

Many wise people say that you never stop learning, so take their advice and educate yourself on the insurance that you spend a lot of money on and can’t get away with not having.