Nobody cherishes buying auto insurance, especially when their premiums are through the roof. Since consumers have many insurance providers from which to choose, it can be hard to locate the lowest cost insurance company.
How insurance companies determine rates
An important part of buying insurance is that you know some of the elements that come into play when calculating the rates you pay for auto insurance. When you know what positively or negatively influences your rates helps enable you to make changes that will entitle you to better auto insurance rates.
The list below includes a few of the “ingredients” that factor into prices.
- Are you male or female? – The statistics show women are more cautious behind the wheel. That doesn’t necessarily mean that men are worse drivers. Both sexes tend to get into accidents in similar numbers, but men cause more damage. Men also have more aggressive citations such as DWI and reckless driving. Young males tend to get in the most accidents and thus pay the highest rates.
- Older drivers pay less – More mature drivers are more cautious drivers, file fewer claims and get fewer tickets. Teen drivers tend to get distracted easily when driving therefore auto insurance rates are much higher.
- Little extras can really add up – There are a lot of extra bells and whistles that you can get tricked into buying if you aren’t careful. Coverages like roadside assistance, accidental death and additional equipment coverage may be wasting your money. These coverages may sound good initially, but now you might not need them so get rid of them and save.
- Please use or commuting – Driving more miles in a year the more you’ll pay to insure your vehicle. Most insurance companies apply a rate based upon how you use the vehicle. Vehicles not used for work or commuting get more affordable rates than vehicles that are driven to work every day. Ask your agent if your auto insurance coverage shows the proper vehicle usage.
- Equipment add-ons that lower auto insurance rates – Owning a car that has an advanced theft prevention system can help lower your rates. Theft prevention devices like LoJack tracking devices, vehicle tamper alarm systems or GM’s OnStar system can help prevent your vehicle from being stolen.
- Higher deductibles cost less – Your deductibles represent how much money you are required to spend out-of-pocket before your auto insurance pays a claim. Physical damage coverage, commonly called comprehensive (or other-than-collision) and collision coverage, insures against damage to your car. Examples of covered claims are colliding with a building, vandalism, and windstorm damage. The more money you’re willing to pay, the bigger discount you will receive.
Do you qualify for discounts?
Companies offering auto insurance don’t necessarily list all their discounts in a way that’s easy to find, so we took the time to find some of the more common and the more hidden auto insurance savings. If you aren’t receiving every discount available, you’re just leaving money on the table.
- Discount for Good Grades – A discount for being a good student can save 20 to 25%. The discount lasts up until you turn 25.
- Discount for New Cars – Putting insurance coverage on a new car can save up to 30% since new cars are generally safer.
- Defensive Driver – Taking part in a course in driver safety could possibly earn you a 5% discount if your company offers it.
- Accident Waiver – A few companies will forgive one accident without raising rates if your claims history is clear prior to the accident.
- Early Signing – Some companies give discounts for buying a policy prior to your current policy expiring. This can save 10% or more.
Drivers should understand that most of the big mark downs will not be given to all coverage premiums. Most only reduce the price of certain insurance coverages like liability and collision coverage. So even though it sounds like all the discounts add up to a free policy, it just doesn’t work that way.
To see a list of providers with discount auto insurance rates in Wahoo, click here.
Can you really save that much by switching?
Consumers get pounded daily by advertisements for car insurance savings from companies such as State Farm, GEICO and Progressive. They all say the same thing of big savings if you move your policy.
But how can every company make the same claim? This is how they do it.
All companies have a certain “appetite” for the type of driver that makes them money. For example, a profitable customer might be profiled as between 30 and 50, is a homeowner, and has a high credit rating. A customer getting a price quote who matches those parameters will get very good rates and therefore will save quite a bit of money when switching.
Potential customers who are not a match for this ideal profile will be quoted higher prices which usually ends up with the customer not buying. The ad wording is “drivers who switch” but not “drivers who get quotes” save that kind of money. This is how insurance companies can claim big savings. This emphasizes why it’s extremely important to get a wide range of price quotes. Because you never know the company that will provide you with the cheapest rates.
More consumer information in Nebraska
Additional detailed information can be found at the Nebraska Department of Insurance website. Visitors are able to read consumer alerts, find disaster information, and file complaints about a company.
Smart shoppers get results
We’ve covered some good ideas how to reduce auto insurance prices online. The key thing to remember is the more companies you get rates for, the better chance you’ll have of finding lower rates. You may even find the best price on auto insurance is with a company that doesn’t do a lot of advertising. Smaller companies may have significantly lower rates on certain market segments compared to the large companies like Progressive and GEICO.
As you prepare to switch companies, do not buy less coverage just to save a little money. There have been many situations where drivers have reduced uninsured motorist or liability limits and found out when filing a claim that saving that couple of dollars actually costed them tens of thousands. Your strategy should be to find the BEST coverage at the best price while not skimping on critical coverages.