For many new car owners and drivers, most of the time, car insurance is more a pain than a benefit – with the pain part being located in the amount they have to pay. More so, understanding the basics of car insurance can be more overwhelming – guidelines, policies and procedures of today’s insurance providers. Below, are some important, yet oftentimes obscure, insurance facts, so you’re “in-the-know” when you’re on-the-go.
- Brand loyalty can cost you. The list has grown to a confusing labyrinth of criteria causing insurance rates to differ dramatically from provider to provider. So, instead of allowing your policy to automatically renew, comparison shop once a year to ensure you’re getting the best auto insurance rates. Some companies provide policies direct to consumers, while others sell policies through agents or brokers.
- Your credit impacts your insurance rates. Insurance providers have found that certain credit characteristics for an individual are useful to predict of how likely it is that the individual will have an insurance claim. insurers may use credit-based insurance scores in conjunction with other variables to assess the likelihood of claims submitted. These variables may include age, driving record, claims history, place of residence, the type of car and the average miles driven, among others. As a general best practice, do what you can to improve your credit.
- You’ll pay in the long run if you opt to stop payment. Switching car insurance companies is not that easy as stopping payment. Sure, your policy will cancel, but your existing insurance company could report you to the credit bureaus for non-payment, damaging your credit score in the process. What’s more, your insurance history will reflect a cancellation which may cause a new provider to decline your application or charge you higher premiums in the future. Instead, be sure to complete the necessary paperwork with your existing provider, such as a policy cancellation form, and time it right by starting your new policy on the date your old policy ends.
- Your car insurance company can cancel or non-renew at any time. This will happen if you violate one or more of its guidelines during your policy period. Same goes for non-renewal. Things such as failing to pay your premium on time, losing your driver’s license due to suspension or revocation, submitting too many at-fault claims, or misrepresenting your driving history or past insurance claims could all be reasons for cancellation or non-renewal.
- You could save money by paying your car insurance premium in full. You might be surprised to learn most car insurance companies charge an administrative fee to break up your premium payments into instalments. The more you divvy up your payments in installments, the more these “convenience fees” add up, and your once-cheap car insurance can now cost substantially more. There may also be charges for the method of installment payment you choose, such as automatic bill pay or pay-by-phone.