We’re here today with Richardson’s top insurance agency, Insurance Source of Dallas. Expert insurance agent & analyst Tamer Roddy is providing 7 important ways you can drastically save on auto-insurance.
1. Insurance companies change rates all the time
Car insurance providers change rates many times throughout the year. This is to account for the many different risk factors.Premiums can fluctuate from a month to month basis to even a day to day basis.
For example, if you’re insured in a state like Alabama your premium rates will most likely be higher if you’re shopping for vehicle insurance between the months of March and May due to peak tornado season.
Therefore, property in Alabama is at a higher risk for potential damage within this short period of time. An increase in claims means companies must increase rates to cover these payouts.
Changes in car insurance quotes from day to day aren’t significant enough to make your head turn, but those fluctuations over a longer period of time, like 6 months, can save you hundreds of dollars a year.
2. States change insurance laws & requirements
Your state’s insurance department sets the legal requirements for liability, personal injury protection, and all other coverage options.
For example, drivers in California are legally required to purchase a minimum of $15,000 for bodily injury/death to one person, $30,000 for bodily injury/death to more than one person, and $5,000 for damage to property.
Drivers in California can also opt out of insurance with a cash payment of financial responsibility OR they have the option to sign up for government-subsidized auto insurance.
No matter which state you call home, insurance requirements can change with new legislation which means you may need coveragein order to comply with the law.
3. Changes in your credit history
It is legal in most states for car insurance companies to use your credit score to determine your premium rates. The only states that don’t take credit score into account are California, Hawaii, and Massachusetts.
In a study conducted by the Bureau of Business Researchat UT’s McCombs School of Business, there’s a correlation between your credit score & how likely you are to file a claim (or be at fault in a car accident).
Insurance companies use this research to mark drivers with poor credit scores as financially irresponsible and thus raise their premium costs.It’s estimated that drivers with poor credit scores pay an average of $214 more a year on their premium than drivers with good scores!
4. Changes in lifestyle
A lot changes in a week alone, so by the time 6 months have passed your lifestyle changes could save you money on your car insurance rates.
Birthdays: The older you get, the less you pay for car insurance (with the exception of turning 60+).
It’s important that younger drivers shop around as often as possible because car insurance premiums drop once you reach age 20. These premiums continue to drop every year after that until age 60.
New Driver: Adding a new driver to your policy is a good time to shop around for a new car insurance policy. Anyone living under your roof (who may drive your car at any time) should be added to your policy to ensure your vehicle is covered. Whoever lives with you will still be considered in your rates as a licensed driver living in your household.
There’s a chance for your rates to increase or decrease depending on someone’s driving and financial record.
For example, adding a new driver to your policy can unlock a multi-driver discount. On the other hand, if your in-law with a terrible driving record just moved in you can expect to see a rise in your premium costs.
Get your coverages & discounts sorted that way you’re not paying too much or too little for a coverage plan that could leave you vulnerable.
New House or Address: Your home comes with a various amount of risk factors that affect the cost of your car insurance. If you’re a young adult who moves frequently after each leasing year you should always shop for new insurance quotes.
When setting your premiums, insurance providers consider the crime & traffic rates of where your car spends most of its time. High risk areas generally mean higher insurance premiums.
If your home is in an area with high rates of both, you may want to add on comprehensive or collision coverages that will cover you in the event of theft or damages.
(If you just bought your first home, car insurance companies give a generous discount to homeowners!)
Marriage: If you & your spouse or domestic partner have compatible auto insurance policies, you’ll be able to unlock some serious discounts if you merge them into one policy.
Compatibility of insurance policies depends on factors like your driving records, credit scores, vehicles, and mileage.
If your spouse drives a very expensive car, has a poor credit score or driving record it may be best to keep them off your insurance policy.
Graduation: Your educational background influences your car insurance premiums. The more education you have, the less you pay for coverage.
Study show that drivers without a Bachelors or Master’s degree pay an average of 20% more for their car insurance coverage than those with advanced degrees.
The thought process behind this is the same as why single people pay more for insurance. Insurance companies find correlations between drivers without degrees and a higher number of at-fault accidents and consider it a verifiable cause.
5. Your vehicle loses value over time due to depreciation
Depreciation is the loss in value of a new vehicle. The moment it’s driven off the dealership lot, the car loses value. You shouldn’t be paying the same insurance rate every year for a car that has less value than when you originally insured it.
Depreciation continues for the entirety of a car’s life whether you purchased it new or used. However, the value of brand new cars decreases by 40% within the first year of ownership.
Reassessing your car insurance policy every 6 months to a year will refresh your discounts and coverage options. Like collision and comprehensive, that coverage will match the decreasing value of your vehicle.Research shows that car models 5+ years old spend 20% less on car insurance than new year models.
6. Your neighborhood’s weather, population density, and crime levels
External factors outside of your control, unfortunately, have control over the cost of your insurance policy. Even with a clean driving record and credit history, if you live in a densely populated area with severe weather or high levels of theft you will be paying more to protect your vehicle.Your rates can be even more expensive if you buy insurance through a carrier that insures a large portion of the population you live in! That company is taking on more risk(s) by serving that area and thus will charge more to cover claim payouts.
Researching and getting quotes from carriers that serve fewer people in your area may get you a lower rate than your neighbors.
7 “New” customers get better rates
Drivers looking for car insurance will get better rates if they wait 6+ month to shop for quotes. Why is that?
According to insurance company insiders, new customers are given lower rates simply as a method to get them in the door.
“New” customer doesn’t necessarily mean you’ve never had insurance before. Rather, requesting quotes from a different insurance company after 6 months with your current provider makes you “new”& appealing.
Remember to shop for car insurance quotes every 6 months
Shopping around for car insurance quotes every 6+ months allows you to keep track of situational changes in relation to your coverage. It’ll also keep your insurance provider on their toes when it comes to offering you discounts and coverage recommendations.
While your insurance agent should be helpful, they have dozens of clients! It’s your responsibility to alert them when you encounter a situation that might change your policy needs and premium rates.