Let’s face it, If you’ve taken a look at your Auto insurance bill lately you likely noticed a definite upward trend.
You may ask – “What can I do to keep my rates as competitive as I can?”
In order to better answer that question, we need to first look at how Insurance Companies determine their rates. New technologies allow for a considerable increase in the amount of data that is collected. This enables insurance carriers to help determine the when, who, and where in regard to when claims are most likely to occur and charge accordingly. It is a numbers and statistics based industry, using (among other things) the law of large numbers. Insurance Companies are not “singling” out a particular insured or family and deciding their rates, and they can’t change them at their will. If they want to change rates (in Washington) they must present a case study, data and information to the Insurance Commissioner who will review it and make sure that rate is justified based on the information presented. This can be a long process. When an agent enters in all the information about you it determines what rate the company is allowed to charge you. We are lucky that there are more and more advanced rating algorithms and models that encompass upwards of one hundred different factors to help ensure that we are each being charged as fairly as possible.
However, you do have a say, you can help your own insurance rates…
Here are some factors that weigh heavily in determining rates;
Your Driving Record and Claims History This one may seem obvious but it’s important to understand that many insurance companies are now looking back up to five years on your driving history and rating for claims, even though they may not have been your fault.
Your Age Believe it or not, you really don’t reach your prime, as far as insurance companies are concerned, until age 35. Then once you turn 70 the rates can often start getting higher again the older you get.
Your Marital Status Yes, you get a discount if you are married. Studies have shown again and again that Married drivers are less likely to get into an accident than single people.
Your Address Where you live plays a surprisingly large role in the cost of your auto insurance. The further away you live from a city center or densely populated area, the less you will pay. Insurance companies compile data and divide the state into different rating territories based on overall claims experience in that area.
Your Insurance Score- Your insurance score is a set of information from a combination of sources, one of which can be your credit score. Insurance companies have long used credit as a rating factor for both auto and home insurance. Statistically, there is a correlation between credit score and claims frequency so the better your credit, the better rate you will get. Additionally, how often you switch insurance carriers has an impact over time on the rate you will pay. Important to consider if you “shop and move” each time your policy renews, in the long run that can have around a 3% impact per year.
Type of Vehicle you drive If you own a car has a higher value, costs more to repair, higher theft rate or is a high performance model, you are likely going to pay a bit more for your car insurance.
How much you drive This one often plays a smaller role than you might think, primarily because Insurance companies have no way (yet) to monitor how much you actually drive vs. how much you told them you drive. Therefore, the discounts they offer for lower mileage drivers are not very substantial at this point in time.
Now, without further ado- here are our top five ways to save money on your Auto Insurance
- Keep a clean driving record. Drive safely and within the laws of the road. Be a defensive driver.
- Be careful of filing small claims. Filing small claims will likely cause your rates to go up and our options for insurance carriers to be impacted.
- Pay attention to your credit score. Spend the time to get your score as high as you can, it will benefit you in many ways beyond just your insurance.
- Bundle your Auto and Home or Renters insurance with the same insurance company when possible. Most companies offer a discount between 15% and 25% to bundle.
- Take advantage of the tracking devices and apps now being offered by many insurance carriers. These devices track how much you drive and how you drive and can give significant discounts to safe drivers. Call or email us if you are interested!
- Get married and move out to the country! Ok that is more tongue and cheek than anything but we are really happy you are reading to the end! These things do work and will help you save money on your insurance.